SPEECH 

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HON.  ISAAC  M.  JORDAN. 


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The  House  having:  under  consideration  the  bill  (H.  R.  6771)  to  amend  an  act 
entitled  “An  act  to  aid  in  the  construction  of  a railroad  and  telegraph  line  from 
the  Missouri  River  to  the  Pacific  Ocean,  and  to  secure  to  the  Government  the 
use  of  the  same  for  postal,  military,  and  other  purposes,”  approved  July  1, 1862, 
also  to  amend  an  act  approved  July  2,  1864 — 

Mr.  JORDAN  said: 

Mr.  Speaker:  Whatever  doubts  there  might  be,  as  an  original  ques- 
tion, as  to  the  power  of  Congress  under  the  limitations  of  the  Constitu- 
tion to  make  grants  or  donations  of  lands  for  public  improvements,  the 
power  has  been  so  long  exercised  that  it  is  no  longer  a debatable  ques- 
tion. 

The  policy  and  practice  of  Congress  making  these  grants  for  the  pur- 
pose of  aiding  in  the  construction  of  public  improvements  has  prevailed 
from  the  earliest  history  of  the  country.  They  were  made  during  the 
administrations  of  Adams,  Jackson,  Van  Buren,  Tyler,  Polk,  Fillmore, 
Lincoln,  and  Grant.  Some  were  made  for  railroad  purposes  prior  to 
1850;  and  between  1850  and  1880  grants  of  the  public  lands  for  rail- 
road purposes  were  made  amounting  to  more  than  150,000,000  acres, 
and  patents  have  in  fact  issued  for  more  than  50,000,000  acres  of  these 
lands. 

The  purpose  which  Congress  has  intended  to  accomplish  by  this  dis- 
position of  the  public  domain  has  been  the  opening  up  of  the  Western 
Territories  to  settlement,  the  encouragement  of  emigration  from  the 
more  thickly  settled  States,  the  development  of  the  mineral  and  other 
great  resources  of  the  country,  the  building  up  of  new  political  commu- 
nities, and  their  admission  into  the  Union  as  States.  And  it  is  a singu- 
lar and  interesting  fact  that  while  most  of  the  original  States  made  large 
cessions  of  lands  to  the  Federal  Government,  none  of  them  have  ever 
asked  or  received  any  donations  out  of  these  lands.  They  have  been 
made  entirely  in  the  interest  of  the  Western  and  Southwestern  States. 

The  rapid  and  marvelous  development  of  all  these  States  is  attribu- 
table in  a large  degree  to  these  grants.  More  than  10,000  miles  of  rail- 
road have  been  built  from  the  proceeds  of  lands  so  granted,  and  wher- 
ever these  roads  have  been  constructed  towns  and  cities  have  sprung 
up  like  magic,  the  expectations  of  the  Government  have  been  more 
than  realized,  and  the  national  Treasury  has  received  indirectly  far 
more  than  it  would  have  done  by  the  sale  of  the  land  itself. 


to 


BUREAU j 

WASH  IN 


/ dCONOMlGS, 

CTON,  D C. 


HOPUm",  | UMIY 


IN  tACHAH* 


JUN  3 0 1911 


4 


1 


Grants  of  this  kind  were  made  by  Congress  in  the  following  States 
and  Territories  from  the  year  1850  up  to  the  year  1880: 


Illinois 

Mississippi ... 

Alabama 

Florida.. 

Louisiana 

Arkansas 

Missouri 

Iowa 

Michigan 

Wisconsin.... 

Minnesota.... 

Kansas 

Nebraska 

Colorado 

Nevada 

California 

Oregon 

Dakota 

Wyoming  .... 

Montana 

Idaho 

Washington . 

Utah 

New  Mexico 
Arizona 


Acres. 

2, 595, 053. 
1, 137, 130 
2, 807, 648 
1,700, 467 
1,256,43a 
2, 613, 631 
2, 605, 251 
4, 181, 929 
3, 355, 943 
3, 553,  865 
9, 820, 450 
8, 223, 380 
6, 409, 376 

3. 000. 000 

4. 000.  000 

16. 387. 000 

5. 800. 000 

8. 000.  000 

4. 500. 000 
17, 000, 000 

1.500.000 

11.700.000 

1. 850. 000 

11.500.000 

18.500.000 


Total 154,067, 553 

At  the  time,  therefore,  that  the  grants  were  made  to  the  Union  Pa- 
cific and  Central  Pacific  Railroad  Companies,  although  they  were  much 
larger  than  ever  had  been  made  before,  no  new  policy  was  inaugurated 
by  Congress;  on  the  contrary,  they  simply  followed  a policy  which  had 
been  adopted  early  in  the  history  of  the  country.  The  first  public 
man  whose  prophetic  vision  saw  the  future  of  the  great  West,  and  the 
importance  of  the  Government  taking  steps  to  aid  in  constructing  a rail- 
road to  the  Pacific,  was  Stephen  A.  Douglas.  As  early  as  1845  he  pre- 
pared a bill  to  organize  the  Territories  of  Nebraska  and  Oregon,  and  to 
reserve  to  each  of  said  Territories  alternate  sections  of  land  forty  miles 
in  width  on  each  side  of  a railroad  from  the  Missouri  River  to  the  Bay 
of  San  Francisco. 

After  the  admission  of  California  the  construction  of  a transconti- 
nental road  was  continually  under  consideration  in  Congress.  These 
measures  all  looked  to  the  granting  to  said  road  of  the  public  lands, 
and  making  them  the  carriers  of  the  Government  mails  and  other  prop- 
erty. And  from  that  time  to  1856  the  Government  made  surveys  of 
and  considered  at  least  five  different  routes  for  that  purpose.  The 
Democratic  and  Republican  parties  demanded  its  construction  in  their 
party  platforms,  and  Buchanan,  in  1856,  and  Lincoln,  in  1860,  recom- 
mended the  matter  in  their  messages  to  the  favorable  consideration  of 
Congress. 

President  Buchanan  suggested  long  before  the  war  that  it  be  paid  for 
in  money  and  lands.  In  his  message  to  Congress,  December  6,  1858, 
he  said: 


It  would  be  inexpedient  for  this  Government  to  exercise  the  power  of  con- 
structing the  Pacific  Railroad  by  its  own  immediate  agents.  The  construction 
of  this  road  ought  therefore  to  be  committed  to  companies  incorporated  by  the 
States,  and  Congress  might  then  assist  them  in  the  work  by  grants  of  land  or 
money,  or  both,  with  conditions  and  restrictions  as  to  transportation  of  troops 
and  munitions  of  war  free  of  charge,  and  the  carrying  of  the  mail  at  a fair 
price. 


5 


Indeed,  the  construction  of  such  a road,  in  view  of  our  settlements 
upon  the  Pacific  coast,  became  inevitable.  It  was  impossible  that  in  a 
country  like  ours  our  people  would  consent  long  to  the  inconveniences 
of  an  overland  route  requiring  more  than  thirty  days  to  go  from  the  Mis- 
souri River  to  San  Francisco,  a route  made  dangerous  by  Indians  and 
robbers,  and  which  made  the  cost  of  transportation  almost  incredible. 
This  road  would  have  been  built  whether  the  war  had  come  or  not; 
hut  the  war  had  much  to  do  with  its  construction  and  with  the  char- 
acter of  the  grant  and  subsidy  given  to  the  road,  for  without  these  it 
never  would  have  been  built. 

What,  then,  were  the  circumstances  which  brought  about  the  build- 
ing of  this  road  and  the  liberal  subsidy  and  grant  made  for  that  pur- 
pose ? 

In  April,  1861,  our  civil  war  commenced.  On  one  side  were  arrayed 
all  the  Northern  States,  and  on  the  other  side  all  the  States  from  Mary- 
land to  the  farthest  border  of  Texas.  The  territorial  dominion  of  the 
Southern  confederacy  embraced  about  one-third  of  the  United  States. 
This  conflict  soon  assumed  vast  proportions,  and  the  Government  found 
itself  engaged  in  a great  conflict  for  national  existence.  European  na- 
tions, long  jealous  of  our  great  prosperity,  stood  ready  to  take  advan- 
tage of  our  condition  in  any  way  that  seemed  favorable  to  them.  Eng- 
land was  in  strong  sympathy  with  the  South,  and  France  was  ready  to 
obtain  a foothold  on  this  continent  if  possible. 

As  early  as  1862  the  French  landed  an  army  of  invasion  in  Mexico, 
and,  taking  advantage  of  the  party  strifes  in  that  unhappy  country, 
were  soon  able  to  establish  a monarchy  on  the  ruins  of  the  Mexican 
Republic.  The  Congress  of  the  United  States  were  well  aware  of  this 
danger.  They  saw  that  our  Western  Territories  were  in  peril.  They 
saw  California  hesitating  in  her  loyalty.  They  saw  that  the  permanent 
occupation  of  Mexico  by  France  was  a barrier  to  any  further  extension  to 
our  territory  south;  that  it  threatened  our  control  of  the  Gulf  of  Mex- 
ico, and  made  communication  with  California  by  water  impossible  with- 
out the  consent  of  the  French  Government. 

The  construction  of  a railway  across  the  continent  connecting  us  with 
the  Pacific  States  became  an  absolute  necessity  as  a matter  of  national 
defense.  The  road  had  to  be  built.  The  Government  had  no  money 
with  which  to  build  it.  Her  constitutional  power  to  do  so  was  doubtful. 
Our  credit  was  impaired;  gold  and  silver  had  gone  out  of  circulation; 
a paper  currency  had  taken  its  place;  we  were  issuing  our  bonds  by  the 
hundreds  of  millions;  the  faith  and  property  of  the  nation  were  pledged 
to  their  payment,  and  yet  our  bonds  were  selling  at  far  below  par.  In 
this  state  of  affairs  Congress  was  in  a condition  to  be  liberal  to  any 
individuals  or  corporations  who  would  undertake  the  hazard  and  ex- 
periment of  constructing  this  road  through  a wilderness  inhabited  by 
the  Indians,  over  deserts  uninhabited  by  man,  and  over  mountains  cov- 
ered with  perpetual  snow. 

Under  these  circumstances,  the  Congress  of  the  United  States,  on  the 
1st  day  of  July,  1862,  passed  the  act  for  the  construction  of  a road  from 
the  Missouri  River  to  Sacramento,  2,000  miles  in  length,  by  the  Union 
and  Central  Pacific  Railway  Companies.  By  this  act  Congress  proposed 
a grant  to  said  companies  of  a right  of  way  two  hundred  feet  wide,  more 
than  2,000  miles  long,  all  necessary  lands  for  depots,  &c.,  and  a dona- 
tion of  five  alternate  sections  per  mile  on  each  side  of  the  road  for  a 
width  of  ten  miles,  to  extinguish  all  Indian  titles  which  might  interfere 
with  the  grant,  and  to  loan  to  said  companies  its  bonds  at  the  rate  of 


6 


$ 16, 000  a mile  where  the  road  was  easy  of  construction,  and  for  three 
hundred  miles  through  the  Rocky  and  Sierra  Nevada  Mountains  at 
$48,000  a mile,  and  for  one  hundred  and  fifty  miles  at  the  rate  of  $32,000. 
a mile. 

This  seemed  a princely  offer,  but  such  was  the  condition  of  the  coun- 
try and  of  its  finances,  such  the  hazards  of  the  undertaking,  such  the 
timidity  and  conservatism  of  capital,  that  the  companies  were  unable 
and  unwilling  even  on  these  terms  to  build  the  road,  and  the  Govern- 
ment saw  two  years  pass  by  and  nothing  done  toward  the'  construc- 
tion of  this  great  road.  Such  being  the  condition  of  affairs,  it  prob- 
ably never  would  have  been  built  had  it  not  been  for  what  was  going 
on  in  Mexico.  While  we  were  engaged  in  our  own  conflict,  which 
strained  every  nerve  and  taxed  every  resource,  France  was  completing; 
her  conquest  in  Mexico  and  arranging  to  place  Maximilian  on  the 
throne,  and  the  United  States,  with  shame,  humiliation,  and  mortifi- 
cation, on  the  12th  of  June,  1864  (nineteen  days  only  before  the  amend- 
ing act  of  July  1,  1864,  was  passed),  saw  Maximilian  enter  the  City  of 
Mexico  amid  the  acclamations  of  the  Mexican  people  and  made  emperor 
of  Mexico. 

At  this  time  what  was  the  condition  of  the  United  States  ? Our  na- 
tional debt  had  reached  the  immense  sum  of  seventeen  hundred  and  forty 
millions  of  dollars.  The  credit  of  the  Government  was  greatly  impaired 
at  home  and  abroad.  Sherman  had  met  with  a severe  repulse  at  Kenne- 
saw  Mountain.  Grant  had  been  unsuccessful  at  Spottsy lvania,  and  had 
met  with  severe  disasters  at  Cold  Harbor.  One  hundred  thousand  men 
had  been  lost  in  three  months.  Lincoln  was  about  to  call  for  500,000 
more  soldiers.  This,  indeed,  was  the  supreme  hour  of  the  war.  In  this 
great  national  trouble,  with  civil  war  endangering  the  life  of  the  nation 
at  home,  with  California  hesitating  in  her  loyalty,  with  Indian  raids 
and  troubles  upon  the  frontier,  with  France  violating  the  Monroe  doc- 
trine with  impunity  and  placing  Maximilian  upon  the  throne  in  Mexico, 
was  it  a very  remarkable  or  extraordinary  fact  that  the  Government  or 
Congress  of  the  United  States  should  have  offered  such  large  induce- 
ments to  her  citizens  and  capitalists  in  order  that  a great  military  high- 
way might  be  constructed  which  would  connect  the  eastern  and  west- 
ern parts  of  our  vast  dominions? 

It  may  be  well  to  quote  here  what  was  said  by  Justice  Davis  on  be- 
half of  the  Supreme  Court  of  the  United  States  in  deciding  the  case  of 
The  United  States  v.  The  Union  Pacific  Railroad,  as  reported  in  91 
United  States  Reports,  page  79.  He  said: 

Many  of  the  provisions  in  the  original  act  of  1862  are  outside  of  the  usual  course 
of  legislative  action  concerning  grants  to  railroads,  and  can  not  be  properly 
construed  without  reference  to  the  circumstances  which  existed  when  it  was 
passed.  The  war  of  the  rebellion  was  in  progress,  and  owing  to  complications 
with  England  the  country  had  become  alarmed  for  the  safety  of  our  Pacific 
possessions. 

The  enterprise  was  viewed  as  a national  undertaking  for  a national  purpose, 
and  the  public  mind  was  directed  to  the  end  in  view  rather  than  to  the  particu- 
lar means  for  securing  it.  Although  the  road  was  a military  necessity,  there 
were  ot  her  reasons  active  at  the  time  in  producing  an  opinion  for  its  completion 
besides  the  protection  of  an  exposed  frontier ; there  was  a vast  unpeopled  terri- 
tory lying  between  the  Missouri  and  Sacramento  Rivers  which  was  practically 
worthless  without  the  facilities  afforded  by  a railroad  for  the  transportation  of 
persons  and  property.  With  its  construction  the  agricultural  and  mineral  re- 
sources of  this  territory  could  be  developed,  settlements  made  where  settlements, 
were  possible,  and  thereby  the  wealth  and  power  of  the  United  States  largely 
increased;  and  there  was  also  the  pressing  want,  in  time  of  peace  even,  of  an 
improved  and  cheaper  method  for  the  transportation  of  the  mails  and  of  supplies 
for  the  Army  and  the  Indians. 


7 


It  was  in  presence  of  these  facts  that  Congress  undertook  to  deal  with  the 
subject  of  this  railroad.  The  difficulties  in  the  way  of  building  it  were  great 
and  by  many  intelligent  persons  considered  insurmountable. 

The  scheme  for  building  a railroad  two  thousand  miles  in  length,  across 
mountains,  over  deserts,  and  through  a country  inhabited  by  Indians,  jealous 
of  intrusion  upon  their  rights,  was  universally  regarded  at  the  time  as  a bold 
and  hazardous  undertaking.  It  is  nothing  to  the  purpose  that  the  apprehended 
difficulties  in  a great  measure  disappeared  after  trial,  and  that  the  road  was 
constructed  at  less  cost  of  time  and  money  than  had  been  considered  possible. 
No  argument  can  be  drawn  from  the  wisdom  that  comes  after  the  fact. 

The  project  of  building  the  road  was  not  conceived  for  private  ends,  and  the 
prevalent  opinion  was  that  it  could  not  be  worked  out  by  private  capital  alone. 
It  was  a national  work,  originating  in  national  necessities,  and  requiring  na- 
tional assistance. 

At  the  time  the  Pacific  railroads  were  chartered  and  these  grants 
made  we  were  carrying  on  a great  war,  and  this  was  regarded  as  a war 
measure,  and  seemed  to  be  a proper  exercise  of  power  under  the  cir- 
cumstances which  then  surrounded  us.  Now  we  are  in  the  midst  of 
profound  peace,  and  no  man  in  his  senses  would  contemplate  for  a mo- 
ment making  such  extraordinary  grants  of  the  public  domain  for  such 
purposes,  and  no  political  party  would  now  favor  it.  What  seemed 
proper  then  would  he  improper  and  impossible  now.  Indeed  at  this 
time  we  are  pursuing  the  far  better  and  wiser  policy,  and  instead  of 
disposing  of  our  public  lands  in  large  quantities  to  railroads  or  for- 
eign syndicates,  we  are  reserving  them  as  rewards  for  the  valor  of  our 
soldiers  and  as  homes  for  those  of  our  people  who  will  settle  upon 
and  improve  them. 

Mr.  Speaker,  Congress  in  making  these  grants  was  governed  by  the 
exigencies  of  the  times,  and  did  what  seemed  best  for  the  interest  of 
the  whole  country.  The  object  intended  was  national  defense  and  the 
perpetuation  of  the  Government. 

Congress  had  more  than  one  object  in  view  in  having  these  Pacific 
railroads  built. 

First.  It  desired  to  have  a railroad  built  at  once,  over  which  it  could 
carry  troops,  Government  supplies,  &c. , in  case  of  war  with  France, 
Mexico,  or  if  necessary  in  connection  with  our  civil  war  or  trouble 
with  the  Indians. 

Second.  It  desired  a permanent  postal  and  military  road  under  Gov- 
ernment control. 

Third.  It  wanted  to  develop  the  great  mineral  resources  of  that  vast 
Western  country. 

Fourth.  It  had  in  view  the  opening  up  of  the  whole  of  our  Western 
territory  to  settlement,  the  building  up  of  new  communities  and  States, 
and  increasing  the  wealth  and  power  of  the  country. 

Fifth.  It  expected  to  cheapen  the  expense  of  carrying  the  mail  and 
Government  supplies  in  the  West. 

Sixth.  It  believed  that  the  construction  of  such  a road  would  enable 
it  to  control  the  Indian  problem. 

And  all  these  results  have  been  more  than  accomplished. 

THE  OBJECT  OF  THE  GOVERNMENT. 

The  object  of  the  United  States  was  not  to  make  an  investment  or 
loan  of  money  nor  to  make  a profit;  neither  was  it  its  principal  object 
to  obtain  payment  for  the  lands  granted  or  to  secure  the  money  or 
credit  which  it  loaned  the  companies.  The  object  ot  Congress  was  a 
much  higher  and  more  importantone,  as  will  be  found  in  the  title  and 
in  almost  every  section  of  the  act  creating  the  same.  The  title  of  said 
act  is  as  follows: 

An  act  to  aid  in  the  construction  of  a railroad  and  telegraph  line,  and  to  secure 
to  the  Government  the  use  of  the  same  for  postal,  military,  a nd  other  purposes. 


8 


The  sixth  section  of  said  act  makes  the  grant  upon  condition  not 
merely  that  the  companies  shall  pay  the  bonds  at  maturity,  but  that 
‘ ‘ they  shall  keep  said  railroad  and  telegraph  line  in  repair  and  use, 
and  shall  at  all  times  transmit  dispatches  over  said  telegraph  line,  and 
transmit  mails,  troops,  and  munitions  of  war,  supplies  and  public 
stores  upon  said  railroad  for  the  Government,  whenever  required  to  do 
so  by  any  Department  thereof,  and  that  the  Government  shall  at  all 
times  have  the  preference  in  the  use  of  the  same.  ’ ’ 

The  twelfth  section  of  said  act  provided  that  ‘ ‘ the  track  upon  the 
entire  lines  of  said  railroads  and  branches  should  be  uniform,  and  the 
whole  line  of  said  railroad  and  branches  and  telegraph  shall  be  oper- 
ated and  used  for  all  purposes  of  communication,  travel,  and  trans- 
portation, so  far  as  the  public  and  Government  are  concerned,  as  one 
connected  and  continuous  line.  ’ ’ 

The  seventeenth  section  provides  that  in  case  said  railroad  companies 
should  fail  to  comply  with  the  terms  and  conditions  of  the  act  by  not 
completing  the  road,  branches,  and  telegraph  within  a reasonable  time, 
or  by  not  keeping  the  same  in  repair  and  use,  Congress  might  pass  an 
act  for  the  speedy  completion  or  repair  thereof,  and  appropriate  the 
income  of  the  road  for  that  purpose. 

The  eighteenth  section  makes  still  more  important  and  further  res- 
ervations. Indeed,  so  much  more  important  were  these  reservations  by 
the  Government  of  rights  and  powers  over  these  roads  than  the  money 
loaned  to  the  companies,  that  Senator  Thurman  declared  in  the  Senate 
of  the  United  States  that  he  would  rather  see  the  Government  relin- 
quish all  claims  to  the  bonds  and  interest  loaned  or  paid  for  these  com- 
panies than  to  release  or  surrender  the  power  and  control  which  it  had 
reserved, by  the  charter  over  them.  His  language  was: 

I affirm,  as  I have  affirmed  before,  that  this  Government  had  better  lose  every 
dollar  due  and  all  that  is  to  become  due  to  it  by  these  companies  than  to  give 
up  the  right  which  it  has  to  alter,  amend,  or  repeal  the  charter. 

During  the  discussion  of  the  matters  relating  to  the  land  and  bond 
subsidies  in  the  Senate,  Senator  Wade,  of  Ohio;  declared  that  he  cared 
but  little  whether  the  Government  ever  received  payment  of  a dollar 
of  the  money  loaned  these  companies;  that  the  Government  would  be 
more  than  compensated  in  what  it  would  receive  from  the  opening  up 
of  the  country,  the  founding  of  new  States,  and  that,  as  a matter  of 
national  defense,  this  road  was  an  absolute  necessity.  Similar  senti- 
ments were  expressed  on  the  floor  of  the  Senate  and  by  members  of 
the  House  and  by  almost  the  entire  press,  and  the  whole  country  was 
in  hearty  sympathy  with  this  view  and  purpose.  I have  thought,  Mr. 
Speaker,  that,  in  view  of  the  attacks  which  have  been  made  upon  those 
who  were  connected  with  the  making  of  these  grants,  it  was  only 
right  and  just  to  call  attention  to  the  times  and  circumstances  under 
which  these  subsidies  were  made.  And  I believe  that  by  so  doing  we 
will  be  better  able  to  understand  and  interpret  the  several  acts  relating 
to  these  roads.  It  is  said  that  some  members  of  Congress  were  induced 
to  vote  for  the  act  of  1864  by  improper  considerations.  This  may  be 
true,  but  Congress  has  not  chosen  to  repeal  these  acts,  the  courts  have 
not  set  them  aside,  but  they  have  been  admitted  to  be  valid  by  the 
courts  and  by  every  Department  of  the  Government,  and  to  constitute 
a binding  contract  between  the  companies  and  the  Government;  and  it 
is  too  late  therefore  to  plead  these  matters  now.  So  far  as  we  are  con- 
cerned in  this  case,  we  must  deal  with  these  as  with  any  other  acts  of 
Congress,  and  we  must  respect  them  the  same  as  if  passed  by  ourselves. 


9 


Indeed,  as  was  said  by  the  Supreme  Court  of  the  United  States  in  the 
case  of  Fletcher  v.  Peck,  hereafter  cited:  “The  acts  of  the  supreme 
power  of  a country  must  be  considered  pure  for  the  same  reason  that 
all  sovereign  acts  must  be  considered  just,  because  there  is  no  power 
that  can  declare  them  otherwise.  ’ ’ 

Mr.  Speaker,  the  Pacific  Railroad  Committee  have  had  under  con- 
sideration for  some  time  the  subject  of  the  relation  which  the  Govern- 
ment sustains  to  the  several  Pacific  railroads  which  are  known  as  the 
bond- subsidized  roads,  and  the  best  means  of  obtaining  security  for  the 
amount  owing  by  said  railroads,  and  of  ultimately  obtaining  payment 
of  the  entire  indebtedness. 

Two  bills  are  now  before  the  House  for  consideration  and  action. 
The  one  presented  by  the  committee  contains  two  main  propositions: 

First.  The  extension  of  the  Thurman  act,  not  only  over  the  Union  and 
Central  Pacific  roads,  to  which  it  .already  extends,  but  also  over  the 
Kansas  Pacific,  the  Central  Branch  of  the  Union  Pacific,  and  the  Sioux 
City  and  Pacific  Railroad;  and  the  requirement  that  each  of  these  roads 
should  pay  into  the  sinking  fund,  created  under  the  Thurman  act,  35 
per  cent,  of  its  net  earnings,  instead  of  25,  as  at  present  required. 

Second.  To  appropriate  to  the  payment  of  the  Government  indebted- 
ness all  the  money  which  the  Government  owes  to  any  of  said  roads, 
or  may  owe  them  for  transportation  on  any  of  its  roads  whether  aided, 
owned,  leased,  or  operated  by  .said  companies. 

This  plan  is  one  which  looks  to  compelling  these  companies  to  pay 
to  the  Government  a larger  amount  from  year  to  year  than  the  condi- 
tion of  the  companies  will  justify,  provided  they  keep  up  their  roads, 
pursue  the  policy  which  they  have  been  pursuing  in  reducing  the  rates 
for  passenger  and  freight  transportation,  and  in  .con tending  and  main- 
taining themselves  against  competition  of  rival  roads.  But  this  plan 
makes  no  provision  for  the  payment  or  the  extinguishment  of  the  debt 
owing  by  these  companies  to  the  Government  at  the  time  of  the  ma- 
turity of  the  indebtedness,  which  will  be  in  the  year  1898;  and  the  un- 
paid balance  at  that  time,  it  is  believed,  will  amount  to  not  less  than 
$75,000,000. 

It  was  for  the  purpose  of  meeting  this  great  and  radical  defect  in  the 
bill  of  Mr.  Thompson  which  has  led  us  into  the  consideration,  devel- 
opment, and  advocacy  of  the  plan,  clear,  plain,  and  simple,  by  which 
these  companies  could  be  induced  or  required  to  give  to  the  Govern- 
ment additional  security  for  its  indebtedness,  and  by  which  the  pay- 
ment of  the  debt  would  be  insured  beyond  a reasonable  doubt.  We 
believe  that  we  have  completely  accomplished  these  purposes  by  the 
bill  of  Mr.  Post.  It  provides — 

First.  That  the  Secretary  of  the  Treasury  shall  ascertain  as  of  the 
date  of  October,  1884,  the  present  worth  of  the  indebtedness  to  the 
United  States  of  said  subsidized  roads,  after  deducting  any  amounts 
paid  thereon  or  in  the  sinking  fund  to  the  credit  of  said  companies. 

Second.  That  the  Secretary  of  the  Treasury  shall  divide  the  amount 
so  found  into  a hundred  and  twenty  parts,  and  receive  from  said  com- 
panies a hundred  and  twenty  bonds  of  each  of  said  companies,  payable 
in  semi-annual  installments,  with  interest  at  3 percent,  per  annum,  and 
providing  for  the  payment  and  extinguishment  of  one  of  said  bonds 
every  six  months,  with  a proviso  that  said  companies  should  receive 
no  Government  pay  for  transportation  over  any  of  their  lines  owned, 
leased,  or  operated  until  the  bond  next  becoming  due  shall  be  paid. 

Mr.  BLOUNT.  Will  my  friend  allow  me  to  ask  what  would  be  the 


10 


difference  in  the  amount  paid  to  the  Government  by  these  roads  under 
that  proposition  and  the  amount  which  the  Government  has  been  re- 
ceiving from  them  ? Of  course  we  can  not  tell  about  the  future. 

Mr.  JORDAN.  I will  state  in  regard  to  that  in  a few  minutes,  and 
then  give  a direct  answer  to  the  question  of  my  friend. 

Mr.  BLOUNT.  Of  course  I do  not  care  when  it  is  answered. 

Mr.  JORDAN.  I will  answer  it  in  a few  minutes;  it  will  become  a 
necessary  part  of  my  argument  to  answer  it. 

Third.  That  the  statutory  lien  or  mortgage  created  under  the  acts  of 
July,  1862-’64,  and  the  security  created  by  the  Thurman  sinking-fund 
act  of  May  7,  1878,  together  with  a further  lien  on  the  whole  line  of 
said  companies,  whether  owned,  leased,  or  operated  by  them,  including 
rolling-stock,  fixtures,  &c.,  should  be  and  remain  as  security  for  the 
payment  of  said  bonds  so  to  be  executed.  The  companies  have  under 
this  provision  the  right  ter  pay  up  the  whole  of  the  indebtedness  at  any 
time.  The  said  bill  contains  other  and  important  provisions  looking  to 
the  preservation  of  all  the  other  rights  held  by  the  Government  under 
existing  laws. 

This  bill  provides  for  the  acceptance  by  the  companies  of  the  pro- 
visions of  the  bill,  and  that  on  failure  to  accept  them  they  shall  be  re- 
quired to  pay  35  per  cent,  of  their  net  earnings  to  the  Government; 
and  also  provides  in  that  event  for  a further  and  better  investment  of 
the  moneys  in  the  sinking  fund. 

These  two  plans  are  now  before  the  House.  The  railroads  which 
have  been  subsidized  by  the  Government  with  bonds  as  well  as  lands 
are  as  follows  : 

The  Union  Pacific,  running  from  Omaha  to  Ogden  Station,  a distance 
of  1039  miles. 

The  Central  Pacific,  which  connects  with  the  Union  Pacific  at  Ogden 
Station,  and  runs  from  there  to  Sacramento  City,  a distance  of  860 
miles. 

The  Kansas  and  Pacific,  running  from  Kansas  City  westerly  to 
Gopher  Station,  in  Kansas,  394  miles. 

The  Central  Branch  of  the  Union  Pacific,  running  from  Atchison  to 
Waterville,  Kans.,  100  miles. 

And  the  Sioux  City  and  Pacific,  running  from  Sioux  City,  Mo.,  to 
Fremont,  Nebr.,  a distance  of  101  miles. 

The  amount  advanced  to  all  these  roads  in  the  aggregate  was  $64,  - 
000, 000,  and  neither  it  nor  the  interest  matures  until  1898.  Large  pay- 
ments have  been  and  are  constantly  being  made  upon  this  indebted- 
ness, and  while  the  amount  now  estimated  to  be  owing  is  about  $100,- 
000,000,  it  is  estimated  that  at  the  maturity  of  the  bonds  the  amount 
owing  will  not  be  more  than  $75,000,000. 

Three  important  questions  now  present  themselves  for  the  considera- 
tion of  the  House: 

First.  Will  we  adopt  and  pass  the  bill  presented  on  behalf  of  the 
committee  ? 

Second.  Will  we  adopt  and  pass  the  substitute  offered  by  Mr.  Post  ? 
or, 

Third.  Will  we  leave  the  railroads  as  they  now  are,  to  pay  what  is 
required  of  them  by  law  and  under  the  operation  and  security  afforded 
by  the  sinking  fund  created  by  the  Thurman  act? 

I will  speak  on  these  points  in  their  order. 

The  first  principal  provision  of  the  bill  reported*  by  the  Committee 
provides  that  the  Government  shall  collect  35  instead  of  25  per  cent,  of 


11 


the  net  earnings  of  the  roads;  in  other  words,  changes  the  Thurman 
bill  to  that  extent. 

Under  the  present  or  existing  laws,  from  all  the  bond-subsidized 
roads,  the  amount  annually  received  is  $2,977,096.96. 

Under  the  bill  reported  by  the  committee  the  amount  received  would 
be  $4,502,295.62,  making  a little  more  than  one  million  and  a half,  in 
addition  to  what  the  companies  are  now  paying.  And  under  the  bill 
as  amended  the  amount  required  would  be  nearly  six  millions  of  dol- 
lars. This  is  claimed  to  be  the  great  merit  of  this  bill,  and  the  chief 
ground  upon  which  it  is  urged ; and  certain  figures  are  set  forth  for  the 
purpose  of  showing  that  these  companies  are  able  to  pay  these  extraor- 
dinary amounts  of  money.  In  our  judgment  this  feature  of  this  bill  is 
one  of  the  greatest  and  strongest  objections  to  it.  As  we  regard  the 
matter,  we  consider  that  it  is  much  more  important  that  the  people 
shall  have  cheap  transportation  over  the  whole  system  of  the  Pacific 
roads,  and  through  them  over  all  other  roads,  than  that  the  Govern- 
ment should  coerce  the  speedy  payment  of  its  debt.  I regard  cheap 
transportation  over  the  Pacific  roads,  and  over  all  other  roads,  as  being 
the  most  important  matter  which  can  engage  the  consideration  of  Con- 
gress; and  that  every  act  in  opposition  to  this  idea  should  be  regarded 
with  hostility  by  Congress. 

The  report  of  the  Union  Pacific  Railroad  to  its  stockholders  shows 
that  for  the  year  ending  December  31,  1883,  the  aggregate  amount  of 
its  passenger  and  freight  traffic  was  considerably  greater  than  the  pre- 
vious year.  While  it  carried  21  per  cent,  more  of  passengers  and  23 
per  cent,  more  of  freight,  its  receipts  were  $1,821,342.46  less  than  the 
year  before.  Although  we  have  not  the  official  results  before  us,  we 
are  informed  that  the  same  result  has  occurred  upon  the  Central  Pacific 
and  the  other  roads.  This  was  occasioned  solely  by  a reduction  of 
charges  in  freight  and  passengers.  We  regard  it  as  of  the  utmost  possi- 
ble importance  that  everything  should  be  done  to  encourage  this  re- 
duction and  cheapening  of  transportation,  and  that  nothing  should  be 
done  looking  in  the  opposite  direction.  The  public  who  travel  over 
these  roads,  and  who  transport  their  property  upon  them,  are  entitled 
to  the  most  liberal  consideration  at  our  hands. 

The  bill  of  the  committee  is  in  direct  conflict  with  the  interest  of 
every  man,  woman,  and  child  carried  over  these  roads,  or  who  uses 
them  as  carriers  of  freight.  Let  me  ask  who  is  it  who  will  be  com- 
pelled annually  to  pay  this  additional  million  and  a half  of  dollars  (or 
$3,000,000  if  the  bill  is  amended  as' asked)  which  this  bill  proposes  to 
add  to  the  amount  paid  by  these  companies?  Where  do  the  compa- 
nies get  the  money  with  which  they  pay  and  are  to  pay  the  large 
amounts  required  of  them  by  the  Government  ? Is  it  not  a charge  or 
exaction  upon  the  public — upon  the  people — upon  those  who  use  the 
road?  Every  dollar  in  excess  of  what  these  companies  are  now  re- 
quired to  pay  to  the  Government  will  be  raised  by  an  increase  of  the 
price  of  passenger  and  freight  charges  on  these  roads.  Railroad  com- 
panies are  not  eleemosynary  institutions.  Certainly  nobody  on  this 
floor  has  applied  any  names  of  that  kind  to  them.  They  carry  on  busi- 
ness upon  the  same  principle  as  natural  persons,  for  the  purpose  of 
making  money.  If  they  must  pay  more  they  will  charge  more.  The 
ratio  of  payment  will  be  the  ratio  of  collection,  and  hence  the  ratio  of 
charges. 

Mr.  CASSIDY.  Right  in  connection  with  that  statement,  if  the 
gentleman  will  permit  me,  I will  say  that  I have  the  report  of  the 


12 


Government  experts  sent  to  Boston  to  examine  the  books  of  the  com- 
pany; and  that  report  shows  a falling  off  in  the  net  earnings  of  the 
company,  for  the  first  five  months  of  the  present  year,  of  $1,983,000  in 
round  numbers. 

Mr.  BLOUNT.  What  was  the  amount  of  the  last  dividend? 

Mr.  GASSIDY.  The  last  dividend  they  ever  paid  they  had  to  bor- 
row the  money  to  pay  it. 

Mr.  JORDAN.  One  of  the  roads  I think  pays  6 per  cent,  and  the 
other  7 per  cent. 


Mr.  BLOUNT.  I mean  the  last  dividend. 

Mr.  CASSIDY.  One  and  three-quarters  per  cent. ; they  pay  every 
three  months. 

Mr.  JORDAN.  Here  is  a reduction  in  the  amount  of  the  receipts 
of  that  road  of  nearly  $2,000,000,  and  yet  they  have  transacted  nearly 
25  per  cent,  more  business  than  before.  I am  in  favor  of  that  sort  of 
legislation  which  will  permit  these  roads  to  keep  on  reducing  their  rates 
of  freights  in  order  that  the  people  may  have  the  benefit  of  that  reduc- 
tion in  cheap  transportation. 

Mr.  LAIRD.  Will  my  friend  permit  me  to  ask  him  a question? 

Mr.  JORDAN.  With  great  pleasure. 

Mr.  LAIRD.  Can  you  show  the  House  where  the  Union  Pacific  Rail- 
road has  ever  reduced  its  charges  for  carrying  freights  and  passengers 
a solitary  penny  ? If  so,  I would  like  to  have  you  do  it. 

Mr.  JORDAN.  I would  refer  my  friend  to  the  report  of  the  Rail- 
road Commissioner  on  that  subject.  He  will  find  there  that  there  has 
been  a very  large  reduction  both  in  1882  and  1883. 

Mr.  LAIRD.  I know  there  was  a reduction  in  Colorado,  where  they 
had  been  charging  10  cents  a mile  for  passengers,  to  5 cents  a mile,  and 
there  has  been  some  reduction  for  passengers  in  Nebraska;  but  I know 
of  no  reduction  in  freight  charges. 

Mr.  JORDAN.  I think  my  friend  has  not  thoroughly  and  fully  in- 
vestigated the  report.  He  will  find  on  examination  that  I am  entirely 
correct. 

Mr.  PAYSON.  Will  the  gentleman  permit  an  inquiry? 

Mr.  JORDAN.  Always. 

Mr.  PAYSON.  How  would  it  injure  the  general  public  if  those  gen- 
tlemen controlling  these  railway  corporations  should  accept  smaller 
dividends  than  they  have  been  getting  for  the  last  eight  years  ? 

Mr.  JORDAN.  That  will  depend  upon  two  propositions:  In  the 
first  place,  whether  the  dividends  they  have  been  getting  are  unreason- 
able dividends;  and  second,  whether  these  roads  are  now  in  a condition 
in  fact  to  pay  dividends  upon  their  earnings,  or  whether  they  are  paying 
them  by  exhausting  their  reserve. 

Mr.  PAYSON.  As  a member  of  the  committee,  will  the  gentleman 
give  the  House  his  judgment  as  to  whether  the  dividends  these  com- 
panies have  been  exacting  from  the  people  have  not  been  extortionate 
ever  since  they  first  commenced  paying  them. 

Mr.  JORDAN.  That  will  be  part  of  £he  argument  I will  undertake 
to  make  before  I close.  The  question  is  readily  answered.  The  gentle- 
man will  find  that  I have  considered  all  these  matters  very  fully. 

Mr.  PAYSON.  Will  the  gentleman  allow  one  further  inquiry? 
When  he  comes  to  descant  on  the  dividends  these  companies  have  been 
paying,  will  he  bear  in  mind  the  fact  that  none  of  these  roads  cost  the 
present  companies  a single  dollar  ? 

Mr.  JORDAN.  Now,  I would  like  to  make  a remark  on  that  point 


13 


to  the  House.  What  difference  does  it  make,  so  far  as  regards  the  ques- 
tion upon  which  we  are  now  passing,  whether  the  owners  of  these  roads 
have  paid  a dollar  toward  their  construction?  The  Government  of  the 
United  States  did  not  give  these  companies  these  bonds;  it  loaned  them 
bonds,  did  it  not  ? The  bonds  were  theirs  to  do  with  as  they  pleased. 

Mr.  PAYSON.  It  did. 

Mr.  JORDAN.  And  it  is  exacting  payment  of  the  bonds. 

Mr.  PAYSON.  It  is  trying  to  do  so. 

Mr.  JORDAN.  What  difference,  then,  does  it  make  what  the  owners 
of  the  roads  did  toward  the  construction  of  the  roads  ? The  only  ques- 
tion that  can  arise  is  whether  the  dividends  which  are  being  paid  are 
upon  a fair  capital  stock  of  the  roads,  and  I will  undertake  to  show 
that  they  are. 

I am  glad  to  see  gentlemen  interested  in  this  question,  and  if  they 
will  follow  me  in  what  I say,  or  if  they  will  investigate  these  matters 
as  I have  done  for  months  as  a member  of  the  committee,  they  will  come 
to  the  same  conclusion  that  I do. 

I resume  my  argument  where  I left  off  at  the  time  I was  interrupted. 

Mr.  Speaker,  it  would  nob  be  a difficult  task  in  this  House  to 
show  that  tariffs,  internal-revenue  taxes  are  collected  from  the  con- 
sumer; and  passenger  and  freight  charges  are  simply  taxes  levied  by 
corporations  upon  individuals  who  travel  and  upon  property  which  is 
transported. 

This  being  so,  we  consider  that  this  bill  of  the  committee  will  result 
necessarily  in  an  increase  instead  of  a decrease  of  passenger  and  freight 
transportation  over  these  roads,  and  that  the  public  will  pay,  both  in 
the  cost  of  transportation  and  in  the  increased  price  of  goods,  all  that 
is  demanded  by  this  bill  in  excess  of  what  is  paid  now. 

This  argument  ought  to  be  sufficient  to  induce  the  House  to  reject  a 
proposition  which  makes  the  people  who  use  these  roads  pay  an  addi- 
tional tribute  of  $1,500,000  a year,  or  $3, 000, 000  more,  as  now  asked  by 
the  amendment. 

There  is  another  reason  why  we  can  not  adopt  the  bill  of  the  com- 
mittee, and  which  seems  to  me  a very  strong  one;  and  that  is,  a convic- 
tion that  it  is  necessary  to  the  successful  management  of  the  business 
of  these  roads  that  they  should  be  allowed  to  use  a considerable  portion 
of  their  profits  in  constructing  feeders  and  branch  roads  and  in  main- 
taining the  best  possible  equipment  for  their  roads.  This  has  been  the 
policy  of  these  roads,  in  common  with  all  the  other  great  railroads  of 
the  country,  and  is  a necessity  forced  upon  them  by  powerful  rivals 
who  compete  with  them  for  every  passenger  and  pound  of  freight  carried 
over  their  lines.  This  policy  has  been  beneficial  to  the  companies,  and 
has  enabled  them  to  maintain  their  main  trunk  lines  in  which  the  Gov- 
ernment is  interested,  and  to  pay  to  it  the  amount  required  by  the  Thur- 
man act,  and  to  make  their  business  successful  and  profitable.  Upon 
this  subject  the  Government  directors  of  the  Union  Pacific  Railroad 
say: 

The  road-bed,  track,  buildings,  and  equipment  are  all  in  excellent  condition 
and  kept  well  up  to  the  highest  standard  of  the  best  roads  of  the  country.  The 
feeding  lines  are  bringing  each  year  additional  traffic  to  the  main  line  and  in- 
creasing profits  from  their  own  business,  to  the  permanent  advantage  of  the 
whole  system. 

I regard  it  as  greatly  in  the  interest  of  the  public  that  these  roads 
should  be  well  built,  maintained,  and  equipped,  and  that  they  should 
have  the  means  and  be  left  free  to  compete  with  their  rivals  by  making 


14 


cheaper  rates  to  the  people  in  the  future,  and  any  other  policy  is  short- 
sighted and  unwise;  and  while  it  may  cater  to  some  local  prejudice  or 
feeling,  it  will,  as  a result,  do  great  injury  to  the  general  business  in- 
terests of  the  people;  not  simply  those  who  use  the  road  for  local  traffic, 
but  that  great  body  of  the  people  who  are  carried  over  it,  and  who  use 
it  for  more  important  and  general  purposes. 

They  should  be  allowed  to  use  a considerable  portion  of  their  profits 
in  constructing  feeders  and  branch  roads  and  in  maintaining  the  best 
possible  equipment  for  their  roads.  This  has  been  the  policy  of  all  these 
roads.  It  is  demanded  by  the  necessities  of  business  and  travel  over 
them ; it  is  demanded  in  the  interest  of  the  public  convenience.  It 
is  a necessity  forced  upon  them  by  powerful  rivals,  who  compete  with 
them  for  every  passenger  and  every  pound  of  freight  carried  over  these 
lines. 

Look  at  the  Union  Pacific  Railroad.  You  will  find  it  paralleled 
from  one  end  to  the  other  by  two  great  roads — the  Quincy  and  Bur- 
lington Railroad  upon  the  one  side,  and  the  Atchison  and  Santa  F6 
upon  the  other.  The  case  is  said  to  be  the  same  in  regard  to  the  Cen- 
tral Pacific  Railroad.  It  is  said  that  all  these  roads  are  either  paral- 
leled by  other  great  roads,  or  are  compelled  to  compete  with  other  and 
rival  roads  for  all  the  business  they  transact. 

Mr.  GLASCOCK.  Will  the  gentleman  state  what  line  there  is  par- 
allel to  and  competing  with  the  Central  Pacific  Railroad?  There  is 
no  line  competing  with  the  Central  Pacific  road,  and  it  absolutely  holds 
a monopoly  of  all  the  California  business. 

Mr.  CASSIDY.  I hope  the  gentleman  from  Ohio  will  allow  me  to 
answer  the  gentleman  from  California. 

Mr.  JORDAN.  I yield  to  the  gentleman  from  Nevada,  the  chairman 
of  our  committee,  for  that  purpose. 

Mr.  CASSIDY.  The  gentleman  from  Ohio,  when  he  speaks  of  these 
roads  being  parallel,  or  in  competition  with  other  roads,  means,  as  I 
understand  him,  that  the  Central  Pacific  does  not  control  all  the  busi- 
ness in  that  section  of  the  country,  that  there  is  a diversion  of  business 
from  it,  and  consequently  a reduction  of  the  earnings  of  these  subsidized 
roads.  And  now  taking  his  statement  in  the  sense  in  which  he  means 
it,  I undertake  to  maintain  that  the  completion,  for  instance  of  the 
Northern  Pacific  road,  has  diverted  from  the  Union  Pacific  all  the  Mon- 
tana freight,  all  the  Washington  Territory  freight,  and  in  a great  measure 
the  Oregon  freight.  I maintain,  also,  that  the  completion  of  the  South- 
ern Pacific  has  diverted  a large  share  of  the  business  from  the  Central 
Pacific. 

Mr.  GLASCOCK.  Is  not  the  Southern  Pacific  practically  under  the 
same  control  ? 

Mr.  ANDERSON.  Are  not  all  these  roads  pooled  ? 

Mr.  CASSIDY.  I am  not  speaking  of  competition  as  reducing  rates, 
but  in  regard  to  its  effect  in  reducing  business. 

Mr.  JORDAN.  Resuming  where  I left  off,  I desire  to  repeat  that  the 
policy  of  allowing  these  roads  to  construct  or  aid  in  the  construction  of 
branches  and  feeders  has  been  beneficial  to  the  companies  and  has  en- 
abled them  to  maintain  the  great  trunk  lines  in  which  the  Government 
is  interested  and  to  pay  the  amount  required  by  their  contract  with  the 
Government,  the  amount  fixed  by  the  Thurman  act,  and  to  make  their 
business  successful  and  profitable. 

Another  grave  objection  to  this  bill  of  the  committee  is  that  it  will 
prevent  them  from  paying  dividends  to  their  stockholders.  When  the 


15 


Thurman  hill  was  passed  it  was  never  contemplated  for  a moment  that 
the  roads  should  not  pay  a dividend  to  their  stockholders;  on  the  con- 
trary, it  was  intended  they  should  pay  a dividend.  It  may  be  well  here 
for  me  to  quote  from  the  remarks  of  Senator  Thurman,  the  distinguished 
author  and  champion  of  the  sinking-fund  bill  in  the  Senate. 

On  this  subject  Senator  Thurman  said: 

If  the  committee  had  not  recognized  the  fact  that  it  is  for  the  interest  not  only 
of  the  companies,  but  of  the  country  and  the  public,  that  the  stockholders 
should  be  allowed  to  receive  some  reasonable  dividends,  because  where  roads 
pay  dividends  they  are  always  better  managed  than  where  they  pay  none ; if 
it  had  not  been  for  those  considerations  we  might  justly  have  acquired  more 
onerous  conditions  than  those  that  we  have  imposed  by  this  bill.  Am  I right 
about  that?  It  is  shown  by  the  report  of  your  committee,  by  going  over  the  re- 
ceipts and  expenditures  of  these  companies  for  long  periods,  that  they  can  com- 
ply with  this  bill  and  pay  every  dollar  of  interest  annually  upon  their  indebt- 
edness, both  that  whose  lien  is  inferior  to  that  of  the  United  States  as  well  as 
the  first  mortgage  whose  lien  is  superior ; that  they  can  pay  every»dollar  inter- 
est upon  their  entire  funded  debt,  pay  all  their  operating  expenses,  pay  to  the 
Government  what  by  existing  law  they  are  required  to  pay,  and  pay  into  a 
sinking  fund  what  this  bill  requires  them  to  pay,  and  then  have  annually  for 
distribution  among  their  shareholders  as  follows : The  Union  Pacific  about  4 
per  cent,  on  the  nominal  value  of  the  stock,  or  6£  percent,  on  its  present  market 
value,  and  the  Central  Pacific  about  6.4  per  cent,  on  the  nominal  value  of  the 
stock. 

One  of  the  effects  of  this  bill  of  the  committee  will  be  to  prevent  the 
payments  of  dividends  to  the  stockholders.  This  is  all  wrong.  The 
stock  of  these  roads  has  been  regarded  by  our  people  as  a good  invest- 
ment. It  is  held  and  owned  in  all  parts  of  the  country.  More  than 
5,000  persons  are  stockholders  in  the  Union  Pacific  alone.  The  securi- 
ties of  these  roads,  including  the  stock,  “ have  become  favorites  in  the 
market  for  investments,  and  they  are  widely  scattered  at  home  and 
abroad.  They  have  taken  to  a certain  extent  the  place  of  the  public 
funds  as  investments.”  Stop  the  payment  on  these  stocks,  and  you 
ruin  thousands  of  innocent  people. 

Two  of  these  roads — the  Sioux  City  and  the  Central  Branch  of  the 
Union  Pacific — are  not  only  put  uncl^er  the  operation  of  the  Thurman 
act  by  this  bill  of  Mr.  Thompson,  but  are  required  to  pay  35  per  cent, 
of  their  net  earnings  to  the  Government,  when  as  a matter  of  fact  they 
have  never  paid  a dollar  by  way  of  dividend  on  their  stock ; and  the 
latter  road  is  in  a state  of  hopeless  insolvency. 

Mr.  THOMPSON.  I will  call  the  gentleman’s  attention  to  the  fact 
that  the  Sioux  City  and  Pacific  Railroad  paid  as  dividends  on  its  cap- 
ital stock  the  sum  of  $11,930,  or  more  than  10  per  cent. 

Mr.  JORDAN.  I do  not  so  understand  the  fact.  That  road  has  been 
in  a chronic  state  of  insolvency  ever  since  its  creation.  If  the  com- 
pany did  pay  the  amount  stated,  $11,930,  instead  of  being  10  per  cent, 
on  its  capital  stock,  it  would  only  be  about  1 per  cent,  on  its  stock, 
which  amounted  to  $1,000,000.  And  now  let  me  ask  the  gentleman 
a question.  Did  this  company,  in  the  twenty  years  of  its  existence, 
ever  pay  any  other  dividend  ? 

Mr.  THOMPSON.  I have  not  examined  the  full  list  of  dividends. 
But  I will  state  that  last  year  it  increased  its  net  earnings  over  200  per 
cent. 

Mr.  JORDAN.  The  gentleman  is  again  mistaken.  He  is  referring 
to  the  Central  Branch  of  the  Union  Pacific,  not  to  the  Sioux  City  and 
Pacific  Railroad,  which  only  increased  its  earnings  28  per  cent. 

At  the  time  I was  interrupted  I was  considering  the  question  of  these 
roads  being  allowed  to  pay  dividends  to  stockholders,  and  I have  simply 
to  add  in  addition  upon  that  point  that  this  view  of  the  matter  was 


16 


taken  by  Senator  Thurman  in  a discussion  of  his  bill,  that  no  Senator 
who  took  part  in  that  discussion  on  either  side  ever  suggested  any 
other  course. 

Indeed,  Mr.  Speaker,  will  any  man  in  his  senses,  any  lawyer,  sup- 
pose for  a moment  that  a bill  depriving  the  stockholders  of  all  divi- 
dends would  have  been  regarded  by  the  Supreme  Court  as  constitutional  ? 
They  had  already  decided  that  the  debt  owing  to  the  United  States  was 
not  due  until  1898,  that  the  Government  had  no  right  until  then  to 
require  payment,  and  it  would  have  been  more  than  unreasonable  to 
require  these  companies  to  lay  aside  for  the  future  so  much  of  their 
earnings  as  disabled  them  from  paying  a dividend  to  their  stockholders. 

The  stockholders  of  a railroad  company  are  its  owners,  and  to  have 
deprived  them  of  the  whole  of  their  dividends  would  have  been  an  act 
so  arbitrary  in  its  character  and  so  unreasonable  that  the  Supreme  Court 
would  never  have  decided  it  to  have  been  within  the  limitations  of  the 
constitutional  power  of  Congress.  If  this  policy  had  been  pursued  does 
any  man  suppose  for  a moment  that  this  company  would  not  have  ceased 
business  at  once,  and  been  compelled  to  abandon  its  property  to  the  Gov- 
ernment ? And  we  would  have  found  ourselves  ip  the  position  of  hav- 
ing the  United  States  taking  one  more  step  in  the  direction  of  centrali- 
zation, and  found  it  engaged  in  carrying  on  the  business  of  a railroad. 

Mr.  ANDERSON.  Will  the  gentleman  allow  me  to  ask  him  a ques- 
tion ? 

Mr.  JORDAN.  I hope  my  friend  from  Kansas  will  not  think  me  dis- 
courteous in  declining  to  yield  further.  I have  already  been  too  gener- 
ous in  yielding  my  time  for  interruptions. 

And  now,  Mr.  Speaker,  proceeding  further  in  my  objections  to  the 
bill  of  the  committee  I find  another  important  argument  against  this 
bill  is  that  it  puts  in  jeopardy  ail  the  money  now  in  the  sinking  fund 
under  the  Thurman  bill,  now  amounting  to  about  $5,000,000,  and  will 
result  probably  in  having  that  law  declared  unconstitutional.  There 
has  been  paid  in  already  under  that  bill  many  millions  of  dollars  which 
will  be  lost  to  the  Government  if'  that  law  should  be  declared  uncon- 
stitutional. This  law  was  declared  constitutional,  as  has  been  stated, 
by  a divided  court.  And  whoever  will  take  the  trouble  of  examining 
the  dissenting  opinions  of  Justices  Field,  Bradley,  and  Strong  will  con- 
sider their  argument  against  the  constitutionality  of  the  act  of  May  7, 
1878,  as  entitled  to  the  gravest  consideration.  In  the  mutation  of  hu- 
man affairs  but  five  of  the  justices  who  took  part  in  the  decision  of  that 
case  are  now  on  the  supreme  bench,  and  of  these  five  only  three  believed 
the  law  to  be  constitutional. 

This  bill  of  the  committee,  by  changing  the  amount  to  be  paid  in 
under  the  Thurman  law  and  extending  its  operation,  gives  these  com- 
panies an  opportunity,  if  it  does  not  invite  them,  to  again  test  the  con- 
stitutionality of  this  sinking-fund  law.  Is  it  good  policy  or  wise  states- 
manship to  do  this?  I have  the  highest  possible  regard  forjudge 
Thurman,  and  this  bill  will  long  stand  as  a monument  of  his  ability 
and  skill  as  a lawyer  and  a statesman.  At  the  same  time  I have  the 
most  serious  doubts  as  to  its  constitutionality.  Is  it  not  better  to  stand 
where  we  are  and  take  no  chances  in  this  matter?  Let  us  be  contented 
with  what  we  have,  and  not,  like  the  dog  in  the  fable,  lose  the  substance 
while  grasping  at  the  shadow. 

Mr.  JONES,  of  Wisconsin.  Does  not  the  railroad  company  have 
every  year  the  right  to  test  the  constitutionality  of  that  law,  and  will 
it  not  have  that  right  whether  we  pass  this  bill  or  not  ? 


17 


Mr.  JORDAN.  I think  it  has  the  right  to  do  it  now,  but  these  com- 
panies have  not  been  disposed  to  do  it,  because  they  are  willing  to  pay 
the  amount  required  under  these  various  acts.  But  if  you  undertake 
to  say  that  these  railroads  shall  pay  annually  a million  and  a half  of 
dollars  more  than  they  are  now  paying  (and  indeed  it  would  be  more 
than  three  millions  under  the  amendments  made  to  the  bill),  then  you 
will  have  so  burdened  them  beyond  their  ability  to  bear  that  they  will 
be  compelled  to  find  relief  from  your  oppressive  exactions  either  by 
appealing  to  the  justice  of  the  courts  or  by  abandoning  their  business  or 
surrendering  their  property.  In  my  judgment,  Mr.  Speaker,  this  bill 
of  the  committee  puts  in  jeopardy  all  the  money  now  in  the  sinking 
fund  and  risks  all  that  has  been  expected  from  it.  In  my  opinion  it 
is  an  unwise  measure,  and  I desire  on  behalf  of  the  Government  and  the 
public,  whose  servants  we  are,  to  put  on  record  my  protest  against  it. 

I now  come  to  the  consideration  of  the  fifth  section  of  the  bill  of  the 
committee,  which  is  as  follows: 

Sec.  5.  That  the  Central  Pacific  Railroad  Company  pay  into  said  sinking  fund 
the  sum  of  85,000,000;  that  the  Union  Pacific  Railroad  Company  pay  into  said 
sinking  fund  the  sum  of  $5,000,000;  that  the  Kansas  Pacific  Railroad  Company 
pay  into  said  fund  $2,000,000;  that  the  Sioux  City  and  Pacific  Railroad  Company 
pay  into  said  fund  $500,000;  that  the  Central  Branch  of  the  Union  Pacific  Rail- 
road Company  pay  into  said  fund  $500,000,  all  of  which  said  payments  shall  be 
made  by  said  companies  on  or  before  Janury  1, 1885 : Provided,  however , That  all 
sums  of  money,  if  any, which  are  claimed  by  said  corporations,  or  any  of  them, 
as  due  them  for  services  rendered  the  Government  in  transportation  of  mails, 
passengers,  freight,  or  otherwise,  as  follows,  namely : First,  one-half  compen- 
sation earned  on  bond-subsidized  roads  from  January  1,  1873,  to  June  30,  1878; 
second,  total  compensation  earned  on  non-bond-subsidized  roads  owned,  leased, 
controlled,  operated,  or  managed  by  subsidized  companies  from  January  1, 1873, 
to  this  date;  third,  one-half  compensation  earned  from  July  1, 1878,  to  this  date 
on  bond-subsidized  roads  not  embraced  in  the  act  of  May  7,  1878,  and  which 
said  sums  so  claimed  have  been  withheld  by  the  Government  and  applied,  in 
whole  or  in  part,  to  the  payment  of  interest  on  the  said  subsidy  bonds  or  to  the 
purposes  of  the  sinking  fund,  shall  be  credited  upon  said  cash  payments  di- 
rected to  be  paid  as  aforesaid  to  the  extent  of  the  interest  of  each  of  said  com- 
panies respectively  in  said  claims;  and  upon  all  of  said  sums  claimed  to  be  due 
upon  the  accounts  aforesaid  and  so  withheld,  and  which  have  been  applied  to 
the  payment  of  interest,  there  shall  be  interest  allowed  said  corporations  at  the 
rate  of  3 per  cent,  per  annum  from  the  said  date  of  application  until  covered 
into  the  sinking  fund  under  the  operations  of  this  act;  and  upon  such  portion 
as  went  into  the  sinking  fund  credit  shall  be  given  as  of  date  it  was  passed  to 
said  fund,  with  interest  at  the  rate  produced  by  the  investments  then  made ; 
and  if  said  credits  when  so  allowed  fall  short  of  the  cash  payments  herein  re- 
quired, the  Secretary  of  the  Treasury  shall  suspend  the  collection  of  the  residue 
until  further  directed  by  Congress. 

The  accounts  between  the  Government  and  the  said  corporations  shall  be  re- 
stated to  conform  to  the  requirements  of  this  act,  and  the  unpaid  interest  ac- 
count increased  in  proportion  to  the  sums  transferred  from  it  to  the  sinking 
fund. 

I read  so  much  of  the  report  of  the  committee  as  bears  upon  this 
section.  It  is  as  follows: 

The  accounts  between  the  Government  and  the  railroads  are  in  a very  unsat- 
isfactory and  uncertain  condition.  The  complications  arise  principally  out  of 
the  act  of  March  3, 1873,  which  has  since  been  carried  into  the  Revised  Statutes 
as  section  5260.  The  companies  claim  that  this  act  was  an  attempted  modifica- 
tion, without  their  consent,  of  what  they  claim  was  a charter-contract  made  in 
the  act  of  1864 ; that  by  said  act  Congress  retained  only  the  right  to  withhold 
and  apply  one-half  the  compensation  earned  upon  the  bond-subsidized  portion 
of  the  roads  by  services  to  the  Government ; therefore,  they  say,  the  officers 
having  retained  all  not  only  on  the  bond-aided  portion  but  also  on  the  non-bond- 
aided  road  owned  by  them  (and  upon  roads  not  embraced  by  the  Thurman  act 
since  it  took  effect),  they  have  a right  to  recover  the  same  back  with  interest. 

JO 2 


18 


These  claims,  as  stated,  are  about  as  follows  : 


1.  One-half  compensation  earned  on  bond-subsidized  roads  from 

January  1, 1873,  to  June  30, 1878 $1, 753, 554  79 

2.  Total  compensation  earned  on  non-bond-subsidized  roads 

owned,  leased,  or  operated  by  subsidized  companies  from  Jan- 
uary 1, 1873,  to  June  30, 1882 1, 418, 110  84 

3.  One-half  compensation  earned  from  July  1, 1878,  to  June  30, 1883, 

on  bond-subsidized  roads  not  covered  by  the  act  of  May  7, 1878, 
or  Thurman  sinking-fund  act 221,572  01 


Total 3,393,207  64 


This  is  for  mail  transportation  alone,  and  the  data  furnished  does  not  run  down 
to  date,  nor  has  it  been  practicable  to  obtain  sufficient  information  to  give  even 
an  approximate  estimate  as  to  the  amount  of  compensation  earned  by  the  bond- 
subsidized  roads  for  services  other  than  mail  transportation  of  the  three  several 
classes  above  set  forth  and  for  the  separate  periods  mentioned.  It  is  thought  it 
will  equal,  if  it  does  not  exceed,  the  amount  above  allowed  for  mail  transporta- 
tion. 

These  claims,  if  allowed  with  interest,  will  be  over  $10,000,000,  and  require 
large  deficiency  appropriations  to  pay  the  same.  Shall  they  be  paid,  or  in  some 
way  covered  into  the  sinking  fund? 

It  has  been  held  by  the  Court  of  Claims  that  the  Government  could  not  retain, 
for  the  purpose  of  paying  interest,  any  portion  of  the  compensation  due  on  the 
non-subsidized  portions  of  said  roads,  or  on  roads  controlled,  leased,  or  operated 
by  the  subsidized  companies ; further,  that  it  could  only  retain  one-half  the 
compensation  for  that  purpose  on  the  subsidized  portions  of  said  roads.  This 
practically  declares  the  act  of  March  3, 1873,  inoperative,  and  leaves  the  Govern- 
ment to  pay  the  claims  above  set  forth,  unless  they  can  be  covered  into  a sink- 
ing fund.  (16  Court  of  Claims,  360.)  It  must  be  noted,  however,  that  the  sink- 
ing-fund act  was  not  under  consideration  in  the  decision  referred  to  above. 

It  will  be  seen  that  this  section  relates  to  three  distinct  classes  of 
claims  which  it  is  sought  by  the  arbitrary  act  of  Congress,  by  a sort  of 
legislative  sequestration,  to  take  from  these  roads  and  turn  into  a sink- 
ing fund. 

I deny  the  authority  of  Congress  to  pass  this  act,  and  submit  the 
question  to  the  candid  consideration  of  every  lawyer  and  every  fair- 
minded  man  in  the  House. 

It  is  admitted  in  the  report  of  the  committee,  and  it  was  decided  by 
the  Supreme  Court,  that  Congress  could  not  take  any  of  the  money  or 
current  earnings  of  these  roads  and  appropriate  them  to  the  payment 
of  the  debt;  but  it  is  said  that,  while  we  can  not  do  this,  we  can  order 
these  companies  to  pay  a sum  larger  than  these  amounts  into  the  sinking 
fund,  allow  them  interest  upon  it  (and  thus  kick  the  devil  around  the 
stump),  and  thus  prevent  the  companies  getting  the  money  they  are 
entitled  to. 

Now  let  us  see  what  was  decided  in  the  Sinking-fund  case. 

The  court  decided  in  that  case  simply  that  Congress  had  a right  to 
require  the  companies  which  had  been  subsidized  by  the  Government 
with  bonds  and  lands  to  lay  aside  so  much  of  their  current  earnings, 
after  paying  a dividend  to  their  stockholders,  as  would  be  necessary  to 
protect  the  Government  or  other  creditors,  and  that  a sinking  fund 
could  be  established  in  the  Treasury  of  the  United  States  for  that  pur- 
pose. That  decision  related  wholly  to  the  future  earnings  of  the  road, 
and  did  not  operate  on  any  moneys  already  earned.  The  fifth  section 
of  this  bill,  however,  takes  from  these  companies  money  already  earned 
and  owing  to  it  by  the  Government,  is  retroactive  in  its  character,  de- 
prives them  without  due  process  of  law  of  rights  already  vested,  and  is 
therefore  unconstitutional. 

In  the  Sinking-fund  case,  decided  by  the  Supreme  Court  of  the  United 
States,  in  9 Otto,  page  718,  Chief- Justice  Waite,  in  announcing  the  opin- 
ion of  the  majority  of  the  court,  recognized  fully  the  position  that  I 


19 


contend  for,  namely,  that  Congress  had  no  power  to  pass  any  law  set- 
ting aside  the  past  earnings  of  any  of  the  subsidized  roads  and  placing 
them  in  a sinking  fund.  On  page  719  the  learned  judge  said: 

The  precise  point  to  be  determined  now  is  whether  a statute  which  requires 
these  companies  in  the  management  of  their  affairs  to  set  aside  a portion  of  their 
current  income  as  a sinking  fund  to  meet  this  and  other  mortgage  debts  when 
they  mature  deprives  these  companies  of  their  property  without  due  process  of 
law,  or  in  any  other  way  improperly  interferes  with  vested  rights. 

This  shows  that  the  decision  did  not  relate  to  past  earnings,  but  only 
to  future  income  or  earnings  of  the  road.  There  was  nothing  retroactive 
about  it. 

On  page  720  the  learned  judge  was  £till  more  explicit  on  this  point. 
The  language  used  is:  ♦ 

All  agree  that  the  power  of  Congress  can  not  be  used  to  take  away  property 
already  acquired  under  the  operation  of  their  charters,  or  to  deprive  the  corpo- 
rations of  the  fruits  actually  reduced  to  possession  of  contracts  lawfully  made. 

On  page  721  the  court  seemed  determined  to  leave  nothing  in  doubt 
as  to  its  meaning  on  this  point,  and  said: 

It  [Congress]  can  not  undo  what  has  already  been  done  and  it  can  not  unmake 
contracts  that  already  have  been  made,  but  it  may  provide  for  what  shall  be 
done  in  the  future. 

Again,  on  the  same  page,  the  court  says: 

All  such  legislation  will  be  confined  in  its  operation  to  the  future. 

Mr.  HOLMAN.  But  there  is  a power  of  alteration  or  amendment  in 
the  act. 

Mr.  JORDAN.  My  distinguished  friend  from  Indiana  suggests  that 
there  is  a power  reserved  to  the  Government  in  the  charter  of  these  com- 
panies by  which  Congress  may  alter  or  amend  the  acts  creating  them. 
But,  sir,  it  was  upon  that  direct  proposition  that  the  court  ruled,  and 
I was  reading  from  that  very  portion  of  the  decision  in  support  of  my 
position,  and  I now  call  the  attention  of  the  gentleman  and  the  House 
to  this  part  of  the  decision  again,  and  I will  read  a little  more  fully 
than  I did  before,  in  order  that  the  House  may  see  the  full  force  of  my 
position  and  what  the  court  said  on  the  subject: 

Taking  both  acts  together,  and  giving  the  explanatory  statement  in  that  of 
1862  all  the  effect  it  can  be  entitled  to,  we  are  of  the  opinion  that  Congress  not 
only  retains  but  has  given  special  notice  of  its  intention  to  retain  full  and  com- 
plete power  to  make  such  alterations  and  amendments  of  the  charter  as  come 
within  the  just  scope  of  legislative  power.  That  this  power  has  a limit  no  one 
can  doubt.  All  agree  that  it  can  not  be  used  to  take  away  property  already  ac- 
quired under  the  operation  of  the  charter  or  to  deprive  the  corporation  of  the 
fruits  actually  reduced  to  possession  by  contracts  lawfully  made. 

The  latter  part,  the  gentleman  will  perceive,  is  what  I read  before. 

And  while  I am  upon  the  subject  of  the  power  of  Congress  to  alter 
or  amend  the  acts  of  July  1,  1862,  and  July  1,  1864,  let  me  conclude  all 
that  I have  to  say  upon  that  subject.  These  acts  created  one  corpora- 
tion, the  Union  Pacific,  and  recognized  certain  other  corporations  created 
by  the  State.  These  grants  were  not  mere  gifts  or  donations,  but  were 
made  to  these  companies  in  consideration  of  certain  acts  to  be  done  by 
them.  The  Government  by  these  acts  granted  to  these  companies  their 
right  of  way,  a large  amount  of  lands,  and  agreed  to  loan  its  bonds  or 
credit.  In  consideration  thereof  the  companies  agreed  to  construct 
the  roads  and  telegraph  lines  provided  for  in  the  act  and  keep  the  same 
in  repair  and  use,  to  pay  the  bonds  loaned  at  maturity,  to  transmit  dis- 
patches over  the  telegraph  lines,  and  transport  troops  and  munitions  of 
war,  supplies  and  public  stores  upon  said  railroads  for  the  Government 
when  required  at  certain  rates,  and  give  the  Government  a preference 


20 


in  so  doing,  and  apply  one-half  compensation  and  5 per  cent,  interest 
on  bonds  until  paid.  And  it  was  provided  in  said  acts  that  the  com- 
panies named  therein  should  ‘ ‘ file  their  assent  thereto  under  their  seals 
in  the  Department  of  the  Interior  within  one  year;”  and  these  accept- 
ances were  filed. 

Now,  until  that  was  done  no  right  passed  from  the  Government  or  to 
these  companies;  when  that  was  done  a contract  existed  between  the 
Government  and  these  companies  obligatory  upon  both,  and  from  which 
neither  of  them  could  withdraw. 

It  must  be  evident  to  any  one,  who  will  consider  the  matter  for  a mo- 
ment, that  the  United  States  in  the  enactment  of  these  laws  and  mak- 
ihg  the  contracts  above  mentioned  acted  in  two  distinct  capacities. 
In  creating  the  corporation  and  granting  a franchise  to  it  and  to  other 
corporations  we  see  an  act  of  political  sovereignty,  but  in  all  other  par- 
ticulars we  simply  see  the  Government  making  contracts  as  a civil  cor- 
poration. Under  the  power  to  alter  and  amend  Congress  unquestion- 
ably reserved  certain  rights  in  relation  to  these  companies  and  to  their 
franchises;  but  it  could  in  the  nature  of  things  reserve  no  power  what- 
ever to  alter,  amend,  or  repeal  any  part  of  these  acts  which  by  the  ac- 
ceptance of  the  company  constituted  a contract.  It  seems  to  me  that 
to  take  any  other  view  of  this  matter  would  leave  these  corporations, 
after  they  had  accepted  the  terms  proposed  by  the  Government,  and 
after  they  had  entered  upon  the  execution  of  their  contract  and  built 
their  roads,  entirely  at  the  mercy  of  Congress. 

Touching  the  authority  of  Congress  as  to  its  power  to  alter  and  amend 
such  contracts,  and  claiming  that  in  so  doing  it  can  not  take  away  or 
destroy  rights  which  have  already  vested,  I desire  to  call  the  attention 
of  the  House  tonvhat  has  been  said  upon  this  subject  by  statesmen  and 
courts. 

Mr.  Madison  said,  in  the  forty-fourth  number  of  the  Federalist — 

That  laws  impairing  the  obligations  of  contracts  are  contrary  to  the  first  prin- 
ciples of  the  social  compact,  and  to  every  principle  of  sound  legislation. 

In  the  case  of  Fletcher  v.  Peck,  reported  in  6 Cranch,  page  103,  the 
court  said,  in  substance:  That  legislative  grants  in  the  nature  of  a con- 
tract and  under  which  rights  have  vested  are  not  held  durante  bene 
placito  of  the  law-making  power. 

In  15  Monroe,  Kentucky  Law  and  Equity  Reports,  page  320,  it  was 
said  by  an  eminent  judge  that — 

A reservation  by  the  Legislature  in  a charter  of  power  to  alter,  amend,  or  re- 
peal does  not  imply  the  power  to  alter  or  change  the  vested  rights  acquired  by 
the  corporation  under  the  charter. 

In  the  case  of  the  Commonwealth  v.  Essex  Company,  in  13  Gray  Re- 
ports, Chief-Justice  Shaw,  in  speaking  of  the  power  reserved  in  the 
words  to  alter,  amend,  or  repeal,  said: 

Where  under  a power  in  a charter  rights  have  been  acquired  and  become 
vested,  no  amendment  or  alteration  of  the  charter  can  take  away  the  property 
or  rights  which  have  become  vested  under  a legitimate  exercise  of  the  power 
granted. 

In  the  case  of  Calder  v.  Buell  (3  Dallas,  page  388)  it  was  said  by  the 
court: 

The  Legislature  may  command  what  is  right  and  prohibit  what  is  wrong,  but 
they  can  not  change  innocence  into  guilt,  or  violate  the  rights  of  an  antecedent 
private  lawful  contract,  or  the  rights  of  private  property. 

And  Justice  Swayne,  in  the  case  of  Shields  v.  Ohio,  in  95  U.  S.  S. 
C.  Reports,  said: 

Such  alterations  must  be  reasonable ; they  must  be  made  in  good  faith,  and 


21 


must  be  consistent  with  the  object  and  scope  of  the  act  of  incorporation.  Sheer 
oppression  and  wrong  can  not  be  inflicted  under  the  guise  of  amendment  and 
alteration. 

Where,  then,  Mr.  Speaker,  is  the  power  of  the  Congress  of  the  United 
States  to  take  away  from  these  companies  their  vested  right  in  the 
moneys  already  earned  by  them?  Would  any  man  have  the  hardihood 
to  claim  upon  this  floor  that  Congress  could  take  the  lands  of  these 
companies  for  the  purposes  of  a sinking  fund  ? If  these  companies  had 
United  States  bonds,  stocks,  moneys,  would  anybody  assert  that  Con- 
gress could  take  these  and  put  them  into  a sinking  fund  ? If,  indeed, 
these  companies  were  the  owners  of  bills  receivable  and  other  choses  in 
action,  would  it  be  said  that  Congress  could  seize  on  these,  deprive  the 
companies  of  them,  and  put  them  into  a sinking  fund  ? And  what,  Mr. 
Speaker,  is  a claim  against  the  Government  owing  to  these  companies 
and  withheld  from  them  but  a chose  in  action  ? 

How  pertinent  at  this  point  is  the  language  of  Judge  Strong,  to  be 
found  on  page  738  in  99  U.  S.  S.  C.  Reports.  He  said: 

What  is  property  ? A right  in  action  is  as  completely  property  as  a title  to 
land.  A very  large  part  of  the  property  of  the  country  consists  in  rights^ttend- 
ant  upon  contracts.  The  right  of  a promisee  to  demand  payment  when  a note 
falls  due  is  a right  of  property. 

And  so  a claim  owing  by  the  United  States  to  these  railroad  compa- 
nies is  a vested  right,  that  can  not  be  taken  from  them  by  retroactive 
legislation,  or  in  any  other  way  except  by  due  process  of  law,  and  that 
has  been  defined  to  be  “ by  law  in  regular  course  of  administration 
through  regular  courts  of  justice.” 

Mr.  Thurman  never  thought  anything  of  this  kind  could  be  done,  nor 
was  it  attempted  by  the  act  of  1 873. 

In  4 Devereux,  North  Carolina,  page  1,  Chief-Justice  Ruffin  said: 

To  do  indirectly  in  the  abuse  of  the  exercise  of  an  acknowledged  power,  not 
given  for  but  perverted  for  that  purpose,  that  which  is  expressly  forbidden  to 
be  done  directly,  is  a gross  and  wicked  infraction  of  the  Constitution. 

Mr.  HEWITT,  of  Alabama.  Will  the  gentleman  permit  me  to  ask 
him  a question  ? 

Mr.  JORDAN.  Yes,  sir. 

Mr.  HEWITT,  of  Alabama.  Are  any  of  these  roads  now  indebted  to 
the  sinking  fund;  and,  if  so,  in  what  amount? 

Mr.  JORDAN.  Four  of  them  are  not.  The  Union  Pacific  is  indebted, 
but  it  claims  $4,000,000  to  be  due  to  it  from  the  Government  by  way 
of  compensation  for  transportation.  If  this  is  adjusted  there  is  not  one 
of  them  that  owes  the  sinking  fund  a dollar.  But,  Mr.  Speaker,  the 
next  provision  of  this  section  is,  if  anything,  more  monstrous  and  ille- 
gal than  the  one  I have  just  considered. 

It  proposes  to  take  from  these  companies  and  carry  into  the  sinking 
fund  the  whole  compensation  earned  on  non-subsidized  roads,  whether 
owned,  leased,  controlled,  operated,  or  managed  by  the  subsidized 
roads,  from  January  1,  1873,  to  this  date. 

Mr.  STRUBLE,  of  Iowa.  The  whole  of  the  compensation? 

Mr.  JORDAN.  No  wonder  it  strikes  my  friend  from  Iowa  as  a 
strange  proposition.  Yes,  sir;  the  whole  compensation. 

Now,  in  order  that  the  House  may  understand  the  full  force  of  this 
provision  of  the  bill,  let  me  make  a brief  statement  of  the  facts:  The 
Union  Pacific  Railway  Company,  including  the  Kansas  Pacific,  only  re- 
ceived aid  from  the  Government  in  bonds  on  1,436  miles  of  its  road. 
There  is  now  embraced  in  the  system  of  that  road  4,327  miles.  Eighteen 


hundred  and  twenty-nine  miles  are  owned  by  the  company  and  2,498 
miles  are  merely  controlled  or  operated  by  the  company. 

The  Central  Pacific  Railroad  system  embraces  3,003  miles.  Only 
eight  hundred  and  sixty  miles  were  subsidized  or  aided  in  bonds,  and 
2,177  miles  are  merely  leased  or  controlled  by  the  Central  Pacific. 

Now,  while  not  more  than  one-third  of  the  Union  Pacific  and  not 
more  than  one-fourth  of  the  Central  Pacific  was  subsidized,  it  is  sought 
to  take  the  earnings  of  4,675  miles  of  road  which  received  no  Govern- 
ment aid.  This  amounts  to  an  illegal  appropriation  into  the  sinking 
fund  of  several  millions  of  dollars  already  earned,  and  honestly  owing 
by  the  Government  to  these  companies  for  transportation  services  on 
non-subsidized  roads.  By  the  charter  or  contract  the  companies  agreed 
to  allow  the  Government  to  retain  one-half  compensation  on  the  sub- 
sidized or  aided  lines,  but  it  did  not  agree  to  allow  anything  to  be  re- 
tained on  non-aided  lines,  and  the  Government  paid  on  such  lines  for 
many  years.  There  was  a consideration  for  a promise  to  pay  the  one- 
half  compensation  on  an  aided  road,  and  there  might  be  a pretense  of 
right  to  require  the  other  half  to  be  paid  into  a sinking  fund,  but  here 
there  is  no  promise  to  pay  any  part  of  the  compensation  upon  a line 
not  subsidized,  nor  is  there  any  consideration  for  such  a promise. 

But  it  is  said  that  the  Government  deals  with  the  corporations  and 
not  with  the  roads,  and  that  the  companies  have  promised  to  pay,  and 
this  makes  them  liable  over  the  whole  length  of  their  road,  whether 
they  own  it,  lease  it,  or  operate  it — the  same  exactly  as  they  are  upon 
the  subsidized  portion  of  the  road.  Indeed,  if  this  is  so,  why  do  you 
not  apply  the  same  principle  that  you  do  over  the  subsidized  roads? 
Why  do  you  not  apply  one-half  to  the  payment  of  the  interest  on  the 
bonds?  Why  pay  it  all  into  a sinking  fund?  If  this  proposition  is 
correct,  the  companies  are  entitled  to  have  one-half  applied  to  the  pay- 
ment of  interest,  and  you  have  no  right  to  prevent  it;  and  you  could 
only  carry  the  other  half  into  the  sinking  fund. 

The  advocates  of  this  bill  must  take  one  horn  of  the  dilemma  or  the 
other.  The  Government  either  had  or  it  did  not  have  the  same  right 
to  retain  one-half  of  the  compensation  on  non-aided  as  on  aided  lines. 
If  it  did  have,  then  this  provision  of  the  bill  is  wrong,  as  it  changes 
the  application  of  this  money  by  putting  the  whole  into  a sinking  fund 
when  it  was  bound  to  apply  one-half  to  the  payment  of  interest.  If 
it  did  not  have  this  right,  then  the  Government  should  have  paid  this 
money  to  the  companies. 

Mr.  Speaker,  the  author  of  this  bill  knew  perfectly  well  that  the 
Government  had  no  claim  upon  the  money  earned  upon  these  non-aided 
lines,  and  that  it  ought  to  have  paid  it  over;  and  hence  he  seeks  by 
this  bill  to  have  the  whole  of  it  carried  into  a sinking  fund,  and  not  one- 
half,  as  in  case  of  the  compensation  on  the  portions  of  the  road  subsi- 
dized with  bonds.  But,  Mr.  Speaker,  we  need  not  reason  or  speculate 
upon  this  subject.  It  has  been  already  passed  upon  and  settled  by  the 
courts. 

The  first  case  which  I cite  is  that  of  The  United  States  v.  The  Denver 
and  Pacific  Railway  Company,  reported  in  9 Otto,  page  461.  The  sylla- 
bus of  the  case  is  as  follows: 

The  Denver  Pacific  Railway  and  Telegraph  Company  is  not  liable  for  the  debt 
incurred  by  the  Kansas  Pacific  Railway  Company  on  account  of  subsidy  bonds ; 
and  although  it  is  bound  to  perform  the  Government  service  stipulated  by  the 
Pacific  Railroad  acts  at  the  rates  therein  prescribed,  and  is  subject  to  their  provis- 
ions so  far  as  they  are  applicable  to  it,  no  part  of  the  compensation  due  it  for 
such  service  can  be  retained  by  the  United  States. 


23 


Now  let  me  read  the  note  at  the  end  of  the  decision: 

At  a subsequent  day  of  the  term  Mr.  Justice  Bradley  remarked : “ Since  deliv- 
ering the  opinion  in  this  case  our  attention  has  been  called  to  the  fact  that, 
while  affirming  generally  the  judgment  of  the  court  below,  we  did  not  ex- 
pressly pass  upon  the  question  of  the  right  set  up  by  the  Government  to  retain 
one-half  of  the  amount  of  compensation  due  from  it  to  the  claimant  for  the 
transportation  of  mails  and  other  public  property.  This  point  was  not  over- 
looked in  rendering  our  judgment  in  the  case.  We  can  not  conceive  on  what 
principle  the  retention  can  be  claimed,  since  the  object  of  retaining  the  compen- 
sation for  such  services  or  any  portion  thereof,  as  expressed  in  the  sixth  section 
of  the  act  of  1862,  was  to  apply  the  amount  so  retained  to  the  debt  due  to  the 
Government  for  subsidy  bonds  granted  to  the  companies  that  should  receive 
the  same.  But  the  claimants  in  this  case  received  no  such  bonds,  and  we  de- 
cided that  neither  the  company  nor  its  railroad  or  property  is  liable  in  anyway 
for  the  payment  of  any  debt  incurred  for  such  bonds  received  by  the  Kansas 
Pacific  Railway  Company.  Consequently  there  is  no  room  for  the  application 
of  the  right  of  retention  in  this  case,  and  the  judgment  of  the  Court  of  Claims 
was  properly  rendered  for  the  whole  amount  of  such  compensation  due.” 

In  the  case  of  The  Union  Pacific  Railway  Company  v.  The  United 
States,  reported  in  the  sixteenth  volume,  page  353,  of  the  Court  of  Claims 
Reports,  the  court  held  that  compensation  should  be  paid  to  a subsidized 
company  for  services  on  a part  of  its  road  owned  but  not  aided  by  sub- 
sidy bonds.  And  in  the  same  volume  of  reports,  on  page  361,  will  be 
found  the  case  of  The  Central  Branch  of  the  Union  Pacific  Railway 
Company  v.  United  States,  in  which  the  same  court  decided  that  com- 
pensation should  be  paid  for  services  to  a subsidized  company  on  a line 
leased  by  it.  These  cases  were  regarded  as  so  clear  by  the  Attorney- 
General  of  the  United  States  that  they  were  not  carried  to  the  Su- 
preme Court.  Indeed,  the  decisions  of  the  Supreme  Court  of  the  United 
States  in  the  case  of  The  United  States  v.  The  Kansas  Pacific  Railway 
Company,  in  9 Otto,  page  450,  and  the  case  of  The  United  States  v. 
The  Denver  Pacific  Railway  Company  (above  quoted,  in  the  same  vol- 
ume of  reports)  had  so  settled  the  principles  of  these  cases  that  it  was 
useless  to  go  any  further  in  the  matter. 

In  addition  to  all  these  decisions  Hon.  William  Lawrence,  First  Comp- 
troller of  the  Treasury,  in  one  of  the  Pacific  Railway  cases,  rendered  an 
able  and  interesting  decision,  in  which  he  reviews  all  the  decisions  upon 
the  subject  and  decides  the  same  way.  The  principle  that  I contend  for 
ought  now  to  be  considered  settled,  as  it  has  been  decided  by  the  First 
Comptroller  of  the  Treasury,  by  the  Court  of  Claims,  and  by  the  Su- 
preme Court  of  the  United  States.  In  all  these  decisions  the  companies 
are  held  to  be  one  thing  and  the  roads  another,  and  no  duty  or  liability 
is  held  to  accrue  under  the  acts  of  July  1, 1862,  and  July  1, 1864,  except 
upon  or  to  the  extent  that  the  road  was  subsidized.  Hence  it  is  that  the 
courts  have  refused  to  recognize  any  lien,  right,  or  claim  of  any  kind 
upon  the  non-aided  lines.  It  thus  appears  that  the  attempt  to  take  the 
earnings  of  these  companies  on  the  non-subsidized  lines,  whether  owned, 
leased,  operated,  or  managed,  is  illegal,  and  this  section  of  the  bill  un- 
constitutional. This  act  of  the  Government  might  well  be  likened  to 
the  case  of  a mortgagee  who  holds  a second  mortgage  upon  a farm,  and 
long  before  his  debt  becomes  due  files  a bill  in  equity  asking  the  court  to 
appoint  a receiver  to  collect  the  earnings  not  merely  from  the  said  farm 
upon  which  he  has  a lien,  but  also  asks  the  court  to  require  the  debtor 
to  pay  to  the  receiver  any  earnings  which  he  should  make  upon  other 
farms  which  he  should  lease  or  control  or  manage.  If  there  is  any  single 
element  in  this  proposition  upon  which  the  court  could  act,  then  I can 
understand  what  my  friend  from  Kentucky  meant  when  he  said  that 
any  court  would  sustain  his  bill. 


24 


Mr.  Speaker,  every  provision  of  this  fifth  section  of  the  bill  of  the 
committee  is  retroactive,  and  without  due  process  of  law  deprives  these 
companies  of  rights  which  have  long  since  vested.  They  can  neither 
be  defended  in  the  forum  of  law  nor  conscience.  This  whole  section  of 
this  bill  is  a mere  assertion  of  arbitrary  power  because  the  Government 
has  got  the  money  in  its  possession.  It  is  indeed  the  clearest  abuse  of 
power  and  done  without  a shadow  of  right.  It  can  be  justified  in  no 
tribunal  which  proposes  to  do  justice.  It  is  the  Government  adjudicat- 
ing in  its  own  favor  matters  which  it  is  unwilling  to  trust  to  the  j udicial 
tribunals  of  the  country.  It  is  an  act  by  which  the  Government,  hav- 
ing refused  to  pay  what  it  was  bound  to  pay,  having  retained  by  superior 
force  or  advantage  of  position  as  debtor,  now  seeks  to  justify  itself. 

It  was  once  said  by  a distinguished  j udge  that  ‘ ‘a  corporation  had  no  soul 
to  be  damned  nor  body  to  be  kicked;  ” and  if  this  act  is  passed  it  would 
seem  that  they  had  no  rights  which  Congress  is  bound  to  respect. 

The  next  clause  of  the  bill  seeks  to  carry  into  a sinking  fund  the 
amount  due  from  the  Government  to  the  Kansas  Pacific,  Central  Branch 
of  the  Union  Pacific,  and  the  Sioux  City  and  Pacific  Railway  Com- 
panies on  their  roads,  whether  subsidized  or  not.  The  same  principles 
contended  for  above  will  apply  to  them,  and  I will  take  no  further  time 
on  this  subject. 

The  sixth  section  of  the  bill  of  the  committee  directs  that  all  the 
■compensation  which  the  Government  may  hereafter  owe  to  these  com- 
panies for  transportation  over  non-subsidized  lines  if  owned,  leased,  or 
operated  by  them  shall  become  and  be  the  sinking  fund.  The  argu- 
ment above  made  and  authorities  above  cited  apply  equally  to  that  sec- 
tion, and  I will  not  detain  the  House  further  on  this  subject. 

Mr.  BLOUNT.  Does  this  proposition  interfere  with  these — with  the 
leases  or  contracts  which  these  roads  have  made  or  with  the  payment  of 
the  amount  due  under  them  ? 

Mr.  JORDAN.  That  depends  upon  the  construction  which  may  be 
given  to  the  bill.  I do  not  want  to  interpret  the  bill  in  that  particular. 
Every  member  will  have  to  do  that  for  himself.  I may  say  that  I re- 
gard this  clause  of  this  bill  as  a reckless  attempt  to  extend  this  octopus 
bill  over  non-subsidized  lines  without  any  reference  whatever  to  their 
rights. 

AS  TO  THE  POST  BILL,  OR  SUBSTITUTE  OF  THE  MINORITY. 

Mr.  Speaker,  I have  said  much  more  than  I intended  in  this  case, 
and  I will  therefore  be  brief  upon  what  I have  to  say  upon  this  substi- 
tute. It  can  well  rest  upon  what  has  so  ably  been  said  by  the  gentle- 
man from  Pennsylvania  [Mr.  Post],  and  what  may  be  said  by  the  gen- 
tleman from  Nevada  [Mr.  Cassidy],  the  chairman  of  the  committee. 

It  is  not  claimed  that  this  bill  is  perfect,  and  indeed  there  are  several 
amendments  to  it  which  have  been  under  consideration  and  should  be 
made  before  it  is  passed.  The  bill  is  before  the  House,  and  amend- 
ments can  easily  be  made  to  relieve  it  of  any  objectionable  features. 
This  bill  when  amended  will,  in  my  judgment,  be  far  preferable  to  that 
of  the  committee  as  presented  by  Mr.  Thompson. 

It  is  the  principle  of  this  bill  which  we  desire  to  have  presented  and 
considered  by  the  House.  If  you  examine  it  dispassionately  and  care- 
fully you  will  adopt  it.  If  the  bill  of  the  committee  should  become  a 
law,  and  the  amount  required  by  it  should  be  paid  by  the  companies, 
there  would  still  remain  owing  to  the  Government  in  1898  $96,000,000. 
The  Government  would  then  be  in  the  same  position  that  it  now  is,  ex- 
cept as  to  the  amount  now  owing,  and  would  have  to  devise  some  mode 


25 


of  collecting  this  debt  and  making  a final  settlement  with  the  company. 
We  have  thought  it  best  to  make  this  condition  of  affairs  known  to  the 
House,  and  to  present  a bill  looking  to  such  a settlement,  and  also 
looking  to  the  ultimate  extinguishment  of  the  debt. 

The  substitute  of  Mr.  Post  provides  that  the  amount  of  the  indebt- 
edness of  the  companies,  or  the  present  worth  of  such  debt,  should  be 
ascertained;  that  this  indebtedness  should  be  divided  into  sums  within 
the  ability  of  the  companies  to  pay ; that  the  time  for  payments  should 
be  correspondingly  extended;  that  additional  securities  should  be  given 
for  each  payment  so  to  be  made,  and  also  for  the  payment  of  the  whole 
debt.  We  are  satisfied  that  the  principle  of  this  bill  will  have  to  be 
adopted  at  some  time  as  the  basis  upon  which  to  settle  this  matter  with 
these  companies.  It  is  not  so  important  to  the  Government  that  it  shall 
have  its  money  soon  as  it  is  that  the  debt  shal  1 be  secured  and  its  pay- 
ment made  certain.  It  is  also  important  to  the  Government  and  the 
roads  that  this  whole  matter  shall  be  taken  out  of  Congress.  A distin- 
guished Senator  from  Indiana,  Senator  Vooehees,  in  the  debate  at 
the  time  of  the  passage  of  the  Thurman  sinking-fund  bill,  used  this  lan- 
guage upon  this  subject: 

This  subject  ought  to  be  removed  from  Congress ; it  ought  not  to  be  a theme  of 
perpetual  agitation  in  these  Halls.  The  great  interests  at  stake  should  not  be 
made  the  playthings  of  stock  speculators,  brokers,  and  gamblers ; nor  should 
they  be  left  open  for  every  adventurous,  aspiring,  restless  member  of  either 
branch  of  Congress  to  inaugurate  a new  agitation  whenever  his  interests  or  his 
ambition  might  dictate. 

The  force  of  these  remarks  lies  in  the  application. 

By  this  substitute  proposed  by  the  minority  payments  are  to  be  made 
every  six  months  in  certain  fixed  and  definite  sums.  It  is  admitted  by 
Mr.  Thompson  in  his  advocacy  of  the  bill  of  the  committee  that  at 
the  maturity  of  the  debt  of  the  Government  in  1898  there  will  still  be 
due  and  owing  by  these  roads  the  sum  of  $96,000,000;  and  the  most 
remarkable  and  extraordinary  thing  is,  that  in  the  bill  of  the  commit- 
tee no  provision  whatever  is  made  for  the  settlement  or  the  extinguish- 
ment of  this  debt  at  its  maturity.  By  the  plan  proposed  by  the  minor- 
ity in  the  substitute  the  amount  which  will  be  owing  in  1898  will  not 
be  much  greater  than  it  will  on  the  plan  proposed  by  the  committee. 
The  amount  required  under  the  substitute  is  within  the  ability  and 
capacity  of  the  company  to  pay  without  interfering  with  the  payment 
of  reasonable  dividends  or  with  the  successful  management  and  opera- 
tion of  the  roads.  Neither  will  it  require  them  to  increase  the  price  of 
freight  or  passenger  transportation;  on  the  contrary,  it  will  leave  them 
to  pursue  a policy  dictated  alike  by  common  sense  and  the  necessities 
of  business,  of  gradually  reducing  to  the  public  the  cost  of  transporta- 
tion. This  substitute,  if  adopted,  will  take  away  every  inducement  of 
the  companies  to  divert  the  business  from  the  main  trunk  or  subsidized 
lines  to  other  roads,  or  to  lessen  in  any  way  the  amount  of  their  net 
earnings.  It  settles  at  once  all  controversies  between  the  Government 
and  these  companies,  and  makes  an  end  of  all  litigation  between  them. 

Requiring,  as  it  does,  that  the  companies  shall  give  their  consent  to 
it,  it  yields  at  once  to  the  Government  all  right  to  any  moneys  now 
owing  for  compensation  upon  aided  or  non-aided  lines  and  all  that  may 
hereafter  become  due.  It  gives  by  consent  all  that  is  sought  to  be  ac- 
complished by  the  fifth  and  sixth  sections  of  the  bill  of  the  committee. 
In  order  that  the  semi-annual  payments  may  be  made  certain  beyond 
question  it  provides  that  none  of  the  earnings  on  subsidized  or  non-sub- 
sidized  roads  shall  be  paid  until  the  bond  next  maturing  or  semi-annual 


26 


payment  has  been  made.  And  in  order  that  the  indebtedness  to  the 
Government  may  be  made  absolutely  secure  it  provides  not  only  that 
the  Thurman  sinking  fund  shall  he  continued,  but  that  the  lien  of  the 
Government  shall  extend  not  only  over  the  subsidized  roads  but  over 
the  whole  line  of  the  road. 

I make  a part  of  my  remarks  a statement  showing  the  mileage  of 
roads  operated  January  1,  1884,  by  the  several  bond-subsidized  roads. 
These  are  the  main  and  substantial  features  of  the  substitute.  I have 
not  time  nor  do  I care  to  enter  into  details.  I am  contending  for  an 
important  principle.  If  there  are  any  errors  in  the  bill,  let  them  be 
corrected  by  amendments. 

Believing,  Mr.  Speaker,  that  the  substitute  is  based  upon  a correct 
principle,  that  it  will  put  an  end  to  all  the  controversies  between  the 
Government  and  the  companies,  that  it  will  be  beneficial  to  the  public 
in  cheapening  rather  than  increasing  passenger  and  freight  transporta- 
tion, that  it  will  quicken  the  disposition  of  these  companies  to  pay, 
that  it  will  lead  to  a gradual  extinction  of  the  debt,  and  that  it  will 
secure  its  payment  and  extinguishment  of  the  whole  debt  beyond  per- 
ad venture,  I am  heartily  in  favor  of  the  principle  of  Mr.  Post’s  sub- 
stitute, and  with  slight  amendments  it  should  be  adopted.  If  there  is 
any  mode  by  which  additional  guarantees  and  securities  can  be  required 
from  these  companies  or  given  by  them,  I will  be  glad  to  vote  for  any 
amendment  looking  to  that  end.  Our  object  is  to  obtain  a fair,  honest, 
and  just  settlement  of  this  debt. 

Mr.  Speaker,  I have  presented  the  reasons  why  the  bill  of  the  com- 
mittee can  not  be  adopted  by  the  House,  and  some  reasons  why  a bill 
embodying  the  principles  of  Mr.  Post’s  substitute  must  be  adopted 
sooner  or  later.  If  the  House  is  not  prepared  to  indorse  either  of  these 
measures,  or  has  not  time  in  the  few  hours  allowed  for  debate  to  give 
the  subject  the  consideration  which  its  importance  demands,  then  let 
us  stand  where  we  are,  leaving  these  companies  as  they  now  are,  under 
their  rights  as  created  by  the  acts  of  July  1, 1862,  and  July  1,  1864,  and 
under  the  operation  of  the  Thurman  sinking-fund  act — a measure  in- 
tended by  its  distinguished  author  to  do  the  maximum  of  good  to  the 
Government  and  the  minimum  of  injury  to  the  companies.  From  a 
long  and  careful  examination  of  the  accounts  of  these  corporations, 
running  through  many  years,  from  a full  consideration  of  all  the  infor- 
mation which  has  been  furnished  our  committee  by  the  friends  and  ene- 
mies of  these  companies,  I am  of  the  opinion  that  the  Central  Pacific 
and  the  Union  Pacific,  including  the  Kansas  Pacific,  are  able — not  with- 
out difficulty — to  comply  with  their  contracts  with  the  Government  and 
successfully  carry  on  and  manage  their  roads,  fhat  they  can  not  pay 
any  increased  amount  of  their  earnings,  and  that  the  Sioux  City  and 
Pacific  can  not  even  do  that  much;  and  I submit  now,  with  little  or  no 
comment,  the  facts  and  figures  to  show  the  truth  of.what  I have  said. 

I submit  to  be  printed  a statement  prepared  in  the  office  of  the  Com- 
missioner of  Railroads,  and  which  is  official,  of  the  revenue  and  ex- 
penditures of  the  entire  line  of  the  Union  Pacific  for  the  year  ending 
December  31, 1883,  as  shown  by  the  books  of  the  company.  It  shows 
the  total  receipts  of  the  company  from  all  sources  to  be  $23,226,862.77, 
the  total  expenditures  to  have  been  $22,958,498.05,  leaving  a surplus 
of  $268,364.72.  The  amount  earned  by  these  roads  varies  considerably 
in  different  years;  it  may  be  a million  or  two  more  in  one  year  than 
another,  and  our  committee  is  informed  that  the  present  has  been  a 
year  of  loss  and  disaster  to  the  company  instead  of  profit. 


27 


An  official  statement  prepared  in  the  office  of  the  Commissioner  of 
Railroads  I make  a part  of  this  argument.  This  statement  shows  the 
revenue  and  expenditure  of  the  entire  line  of  the  Central  Pacific  Rail- 
way Company  for  the  year  ending  December  31,  1882. 


The  total  receipts $26, 675, 502  41 

The  total  expenditures 26, 640, 390  48 

Leaving  a surplus  of 35,  111  93 


I submit  with  what  I have  to  say  a statement  prepared  in  the  office  of 
the  Commissioner  of  Railroads,  showing  the  revenue  and  expenditure 
on  the  subsidized  portion  of  the  said  company’s  road  for  the  year  end- 
ing December  31, 1882.  It  shows  that  after  deducting  from  the  amount 
earned  by  the  company  its  expenditures,  a dividend  upon  its  stock,  and 
the  25  per  cent,  required  by  the  Thurman  act,  it  would  leave  a deficit 
of  $170,059.70. 

I also  make  a part  of  wThat  I have  to  say  a statement  showing  the  rev- 
enues and  expenditures  of  the  Central  Branch  of  the  Union  Pacific  Rail- 
road Company,  from  which  it  will  appear  that  after  deducting  from 
the  amount  of  the  receipts  of  said  company  its  expenditures,  interest 
upon  its  first-mortgage  bonds,  and  allowing  for  a dividend  upon  its 
capital  stock,  and  taking  out  the  requirement  demanded  if  the  Thur- 
man law  is  applied  to  this  road. 

I also  have  had  prepared  a statement,  which  I herewith  present,  show- 
ing the  revenue  and  expenditures  of  the  Sioux  City  and  Pacific  Rail- 
way for  the  year  ending  June  30,  1883.  It  shows  the 


Gross  receipts  to  have  been $646, 459  92 

Operating  expenses $495, 821  51 

Deducting  new  construction  and  equipment 33, 915  28 

Interest  on  first-mortgage  bonds 96, 000  00 

Dividend  on  stock  ($68,736.79) 60,000  00 


685, 736  79 

Leaving  a deficit  in  the  receipts  of  this  company  of. 39, 276  87 


without  paying  a dollar  under  the  requirements  of  the  Thurman  act  if 
applied  to  this  road. 

It  thus  appears,  Mr.  Speaker,  that  these  several  companies  can  with 
difficulty  comply  with  their  contract  with  the  Government  and  the 
requirements  of  the  Thurman  sinking  fund,  and  that  they  are  not  able 
to  do  any  more  than  this.  It  would  seem  wise,  therefore,  that  we 
should  either  adopt  the  Post  substitute  or  leave  these  roads  as  they 
now  are,  under  the  operation  of  the  Thurman  act. 

Is  the  amount  owing  to  the  United  States  by  the  Central  and  Union 
Pacific  Railway  Companies  secure  by  existing  legislation  ? 

I do  not  believe,  Mr.  Speaker,  that  there  is  any  doubt  whatever  about 
it.  For  my  part,  I have  no  apprehension  on  the  subject. 

I do  not  believe  that  there  is  any  danger  that  the  United  States 
will  not  receive  every  dollar  owing  to  it  by  the  Central  and  Union  Pa- 
cific Railroad  Companies,  and  I will  occupy  the  House  but  a few  min- 
utes in  showing  that  the  debt  owing  by  these  companies  is  perfectly 
secure. 

The  amount  of  bonds  advanced  to  the  Central  Pacific  Railroad  Com- 
pany was  $27,855,680.  The  interest  at  maturity  of  bonds  will  be 
$50,140,224.  Total  when  due  in  1898,  $77,995,904. 

The  amount  of  bonds  advanced  to  the  Union  Pacific  was  $27,236,512. 
The  interest  at  maturity  of  bonds  will  be  $51,000,000.  Total  at  ma- 
turity of  debt,  1898,  $78,236,512. 

Now  observe  and  remember  that  I have  in  this  calculation  included 


28 


interest  for  fifteen  years  in  advance,  which  the  companies  do  not  owe 
and  which  the  Government  has  not  paid.  In  other  words,  in  this  esti- 
mate is  included  a sum  of  about  $50,000,000  which  would  be  excluded 
if  we  were  considering  the  present  indebtedness  of  these  two  roads. 

But,  Mr.  Speaker,  let  us  see,  if  gentlemen  prefer  it,  what  these  two 
companies  will  owe  in  1898,  at  the  maturity  of  the  debt,  even  when 
the  Government  has  paid  out  $50,000,000  that  it  has  not  yet  paid. 
Remember  that  more  than  $20,000,000  has  already  been  paid  by  these 
two  companies,  and  that  under  existing  laws  and  the  Thurman  sink- 
ing-fund act  they  are  required  to  pay  nearly  $3,000,000  a year,  and 
while  the  debt  is  not  being  reduced,  yet  that  the  annual  increase  is 
less  than  a million  a year. 

I desire  to  read  right  here  a careful  estimate,  not  made  by  myself 
but  by  Mr.  W.  H.  Armstrong,  the  United  States  Railroad  Commis- 
sioner, showing  the  amount  which  will  be  owing  by  the  Central  and 
Union  Pacific  at  the  maturity  of  the  debt  in  1898.  The  estimate  can 
easily  Ibe  verified,  and  is  as  follows,  and  will  be  found  in  his  report  of 
1883,  on  page  13: 

CENTRAL  PACIFIC  RAILROAD. 


Principal  sura  of  bonds  advanced $27,855,680  00 

Thirty  years’  interest,  at  6 per  cent , 50, 140, 224  00 


Total 77,995,904  00 

Deduct  transportation,  -&c.,  approximately,  in  round 

numbers,  first  fifteen  years $6, 000, 000 

Deduct  transportation,  &c.,  approximately,  in  round 

numbers,  last  fifteen  years,  at  present  rates 13,500,000 

By  accumulation  of  sinking  fund  for  the  next  fifteen 
years,  estimated  at  $500,000  per  annum,  together  with 
amount  already  in  sinking  fund,  at  3 per  cent,  per 

annum 12, 500, 000 

32, 000, 000  00 


Balance  due  United  States  at  maturity  of  bonds 45, 995, 904  00 

UNION  PACIFIC  RAILWAY. 

Principal  of  bonds  advanced $27,236,512  00 

Thirty  years’  interest,  at  6 per  cent 49, 025, 721  60 


Total 76,262,233  60 

Deduct  transportation,  &c.,  approximately,  in  round 

nuthbers,  for  first  fifteen  years $12,000,000 

Deduct  transportation,  &c.,  approximately,  in  round 
numbers,  for  last  fifteen  years,  at  the  present  rate...  16,500,000 
By  accumulation  of  sinking  fund  for  the  next  fifteen 
years,  estimated  at  $900,000  per  annum,  together  with 
amount  already  in  sinking  fund,  at  3 per  cent,  per 

annum  22,500,000 

51,000,000  00 


Balance  due  United  States  at  maturity  of  bonds 25, 262, 233  60 

By  authority  of  the  act  of  Congress  of  July  1,  1864,  each  of  these 
companies  placed  a mortgage  upon  its  road  to  the  amount  of  the  bonds 
advanced  by  the  Government.  This  is  the  only  lien  or  incumbrance 
prior  to  that  of  the  United  States,  and  the  interest  thereon  has  all  been 
paid  up.  Subject  to  those  mortgages  the  United  States  has  the  second 
lien  on  the  whole  line  of  these  railroads  and  telegraph,  together  with 
the  rolling-stock  of  every  kind  and  description,  and  the  act  provides  that 
‘ ‘ on  the  refusal  or  failure  of  said  company  to  redeem  said  bonds  or  any 
part  of  them,  when  required  so  to  do  by  the  Secretary  of  the  Treasury,  in 
accordance  w ith  the  provisions  of  this  act,  the  said  road,  with  all  the 


29 


rights,  functions,  immunities,  and  appurtenances  thereunto  belonging, 
and  also  all  lands  granted  to  the  said  company  by  the  United  States 
which  at  the  time  of  said  default  shall  remain  in  the  ownership  of  the 
said  company,  may  be  taken  possession  of  by  the  Secretary  of  the 
Treasury  for  the  use  and  benefit  of  the  United  States.  ’ ’ 

This  security  on  these  two  roads  embraces,  therefore,  a railroad  with 
a road-bed  200  feet  wide,  from  Omaha  to  Sacramento  City,  nearly  2, 000 
miles  in  length,  with  all  the  equipments  in  cars  and  everything  neces- 
sary to  constitute  a first-class  road.  Added  to  this  is  a telegraph  line 
coextensive  with  the  road,  with  all  the  apparatus  connected  therewith. 
These  roads  were  built  at  great  expense  originally ; they  have  been  im- 
proved to  meet  the  demands  of  business;  they  have  constructed  im- 
portant branches  and  feeders,  and  now  own  in  all  about  3,000  miles  of 
road;  are  interested  largely  in  many  of  their  branches  and  connections; 
they  are  in  full  running  condition,  and  are  operated  under  skillful  man- 
agement; the  amount  of  their  through  and  local  business  is  constantly 
increasing;  along  their  main  lines  and  branches  towns  and  cities  have 
grown  up;  their  business  has  become  vast  in  amount  and  profitable  in 
its  character.  By  the  time  this  indebtedness  matures,  in  1898,  the  pop- 
ulation of  the  United  States  will  have  increased  to  75,000,000. 

The  country  through  which  this  road  passes  will  have  its  full  share 
of  this  increased  population  and  of  the  increased  business  which  natu- 
rally comes  from  it.  When  we  take  all  these  things  into  consideration 
and  add  to  them  the  power  reserved  by  Congress  in  its  charter  over 
these  roads,  a power  to  take  possession  of  the  road  itself  and  all  of  its 
equipments  and  property  upon  a failure  to  pay  its  debts  to  the  Gov- 
ernment, can  any  man  doubt  that  the  claim  of  the  Government  is  en- 
tirely secure? 

I have  said  nothing  of  the  fact  that  the  Central  Pacific  has  laid  aside 
more  than  $6,000,000  in  a sinking  fund  to  meet  its  mortgage  which  is 
prior  to  the  lien  of  the  Government;  nor  have  I said  anything  of  the 
valuable  lands  and  other  property  owned  by  these  companies,  estimated 
at  many  millions  of  dollars. 

Mr.  Speaker,  a great  deal  has  been  said  as  to  the  large  amount  of 
bonds  advanced  by  the  Government  to  aid  in  the  construction  of  the 
Pacific  roads,  the  amount  advanced  to  each  being  about  $27,000,000. 
Considering  that  this  money  was  advanced  by  a Government  represent- 
ing 55,000,000  of  people,  there  is  nothing  extraordinary  or  remarkable 
about  it.  Why,  sir,  the  city  of  Cincinnati,  with  a population  of  not 
more  than  300,000  people,  a city  which  stands,  however,  without  a 
rival  in  this  country  for  the  public  spirit  of  its  people  and  its  citizens, 
issued  its  bonds  to  the  amount  of  more  than  $20,000,000,  most  of  them 
bearing  interest  at  7. 3 per  cent. , and  with  the  proceeds  built  and  con- 
structed and  now  owns  a railroad  running  from  Cincinnati,  Ohio,  to 
Chattanooga,  Tenn.,  only  one  mile  of  which  is  within  the  limits  of  our 
city,  and  all  the  rest  of  it  located  in  the  States  of  Kentucky  and  Ten- 
nessee. We  are  now  leasing  this  road  for  about  enough  to  pay  one- 
half  of  the  interest  which  we  pay  on  the  bonds,  and  we  will  have  to 
continue  to  do  so  until  the  whole  of  the  bonds  are  finally  redeemed. 
The  people  of  Cincinnati  built  this  great  railroad  for  the  purpose  of  es- 
tablishing amicable  and  business  relations  with  the  people  of  the  South. 
We  did  not  regard  this  as  a matter  beyond  the  ability  of  the  people  of 
one  city,  but  gentlemen  upon  this  floor  regard  the  amount  advanced 
to  these  railroads  as  something  marvelous  and  almost  bankrupting 
the  Government.  Allow  me  to  commend  to  the  House  and  the  country 


30 


the  spirit  of  the  people  of  the  city  which  I have  the  honor  in  part  to 
represent  on  this  floor,  and  which  issued  $20, 000, 000  of  bonds  to  build 
the  Cincinnati  Southern  Railroad. 

I have  said,  Mr.  Speaker,  and  I now  repeat  it,  that  I believe  that 
the  indebtedness  owing  by  these  companies  to  the  Government  is  secure, 
absolutely  secure.  In  my  judgment  these  two  railroads,  with  their 
franchises  and  property  and  rights,  in  possession  of  the  country  through 
which  they  run  in  full  and  successful  operation,  are  worth  more  than 
$200,000,000.  Indeed,  I have  been  told  by  men  of  large  knowledge 
and  experience  in  such  matters  that  they  are  worth  greatly  in  excess 
of  this  amount.  And  now,  sir,  I have  said  much  more  than  I intended 
to  say  upon  the  subject  of  these  roads  and  their  relation  to  the  Govern- 
ment. But  these  matters  have  been  under  constant  consideration  by 
our  committee  for  the  last  six  months  and  the  subject  has  become  in- 
teresting to  all  of  us. 

Mr.  Speaker,  it  will  be  seen  that  the  advocates  of  the  bill  of  the  com- 
mittee, and  more  particularly  the  gentleman  from  Kentucky,  have 
made  great  outcry  and  clamor  against  these  companies.  Frauds  com- 
mitted twenty  years  ago,  and  which  have  no  earthly  connection  with 
the  questions  now  under  consideration,  are  brought  forward  to  bias  our 
minds  and  prejudice  the  House.  Language  intemperate  and  unjustifi- 
able has  been  used  and  employed  against  public  men  and  officials  of 
high  and  honorable  character.  Need  I say,  Mr.  Speaker,  that  all  these 
things  are  improper,  and  are  wholly  foreign  to  this  subject  in  debate? 

Need  I say,  sir,  to  this  House  or  to  the  country  that  frauds  perpe- 
trated or  alleged  to  have  been  perpetrated  many  years  ago  in  the  con- 
struction of  one  of  these  roads  can  in  no  wise  aid  us  in  a fair  and  honest 
judgment  upon  the  matters  now  before  us  ? So  far  as  I am  concerned, 
unbiased  and  uninfluenced  by  all  appeals  and  considerations  of  this 
kind,  I stand  here  as  a member  of  this  House  endeavoring  to  the  best 
of  my  ability  to  ascertain  what  are  the  legal  rights  of  the  Government 
and  what  are  the  legal  rights  of  these  companies. 

I know  no  other  way  of  looking  at  this  matter.  The  rights  of  the 
Government  upon  the  one  hand  and  the  companies  upon  the  other  are 
to  be  found,  and  found  only,  in  the  contracts  existing  between  them. 
I know  no  difference  between  the  relations  that  the  Government  sus- 
tains to  these  corporations  and  to  any  other  citizen.  In  the  eye  of  the 
lqw  all  rights  are  equally  sacred,  and  certainly  those  which  have  been 
created  under  the  acts  of  the  Congress  of  the  United  States  ought  to  be 
binding  upon  and  respected  by  us  as  members  of  that  body.  Upon 
this  subject  I can  not  do  better  than  to  quote  the  words  of  Chief- Jus- 
tice Waite: 

The  United  States  are  as  much  bound  by  their  contracts  as  individuals.  If 
they  repudiate  their  obligations,  it  is  as  much  repudiation,  with  all  the  wrong  and 
reproach  that  term  implies,  as  it  would  be  if  the  repudiator  had  been  a State,  a 
municipality,  or  a citizen. 

Our  action  in  the  matters  now  before  us  should  be  wise,  conservative, 
just,  and  fair,  and  within  our  constitutional  powers.  Let  us  be  care- 
ful, watchful,  and  zealous  in  the  interest  of  the  people,  that  every  law 
made  for  the  protection  of  their  interests  be  enforced;  let  these  com- 
panies be  required  to  obey  their  charters,  comply  with  their  contracts 
with  the  Government,  pay  to  it  the  uttermost  farthing  they  owe;  but 
when  they  have  done  this,  let  us  give  them  the  protection  of  the  law, 
and  see  to  it  that  the  Constitution  itself  is  not  violated  in  an  attempt 
to  deprive  them  of  their  vested  rights. 


Statement  showing  mileage  of  roads  operated  January  1,  1884,  by  the  several  companies  to  which  the  United  States  have  loaned 

bonds  in  aid  of  construction. 


31 


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Statement  showing  mileage  of  roads  operated  January  1,  1884,  <&c. — Continued. 

RAILROADS  OPERATED  BY  THE  CENTRAL  PACIFIC  RAILWAY  COMPANY— Continued. 


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36 


Exhibit  No.  2. 


UNION  PACIFIC  RAILWAY  COMPANY. 

Statement  of  the  revenue  and  expenditures  of  the  entire  line  for  the  year  ending  De- 
cember 31, 1883,  as  shown  by  the  general  books  of  the  company  in  Boston. 


Earnings : 

Passenger ! $4,659,116  16 

Freight 14,268,291  31 

Mail  (less  disallowed  on  main  line,  $86,917.65) 739, 133  19 

Express 705,261  96 

Miscellaneous 630,739  16 


Gross  earnings 

Income  from  investments  : 

Dividends  on  stocks 

Interest  on  bonds 

Miscellaneous  investments 


$21,002,541  78 

701, 923  04 
1, 465, 345  00 
57,052  95 


2, 224, 320  99 


Total  receipts. 


23, 226, 862  77 


Expenses : 

Conducting  transportation 2,596,230  38 

Maintenance  of  way 2, 095, 077  13 

Motive  power 3,778,344  59 

Maintenance  of  cars 848, 062  73 

General  expenses  and  taxes 1, 036, 825  67 


Total  operating  expenses 

Discount  and  interest 32, 094  97 

Interest  on  first-mortgage  bonds 2, 542, 363  58 

Interest  on  other  funded  debt 2, 881, 677  92 

United  States  requirements  for  1883 1, 898, 679  85 

Company  sinking  fund  requirements  for  1883 476,488  78 

Dividends  declared  on  capital  stock 4, 260, 788  00 

New  construction 101, 177  22 

New  equipment 184, 545  80 

Expenses  of  the  land  department 226, 141  43 


10,354,540  50 


12, 603, 957  55 


Total. 


22,958,498  05 


Leaves  surplus  of. 


268, 364  72 


Exhibit  No.  3. 


Statement  of  the  revenue  and  expenditures  of  the  entire  line  of  the  Central  Pacific  Rail- 
road Company  for  the  year  ending  December  31,  1882,  ascertained  from  the  general 
books  of  the  company  in  San  Francisco  by  the  book-keeper  of  this  bureau. 


Earnings : 

Passenger 

Freight 

Mail 

Express 

Miscellaneous 


$7,474,216  12 
16, 302, 882  72 
613. 180  88 
350, 286  21 
922,191  19 


Gross  earnings* $25,662,757  12 

Receipts  from  other  sources  : 

Interest  on  sinking  funds  (included  in  both  re- 
ceipts and  expenses) 281,260  00 

711  land-grant  bonds  redeemed  (included  in  both  re- 
ceipts and  expenses  at  par) 711, 000  00 

Earnings,  river  steamers  and  barges m 20, 485  29 

— 1,012,745  29 


Total  receipts* 26, 675, 502  41 


*Earningsand  expenses  of  the  “ entire  line,”  which  means  the  Central  Pacific 
proper  and  all  the  leased  lines  (Southern  of  California,  Southern  of  Arizona,  and 
Southern  Pacific  Railroad  of  New  Mexico) ; total  mileage  being  3,200  miles. 


37 


Operating  expenses : 

Conducting  transportation $2,729,250  38 

Maintenance  of  way 2, 766, 941  81 

Motive  power 4, 328, 538  85 

Maintenance  of  cars 946,501  87 

General  expenses  of  operating 1, 093, 222  87 


Total  operating  expenses 11,864,455  78 

Rentals  leased  lines *.. 4,202,727  89 


Total  operating  expenses  and  rentals* 

Discount  and  interest — balance  after  crediting  the 
account  with  $89,000  on  account-  of  Southern  De- 


velopment Company,  Stockton  and  Copperopolis 

Company,  and  Pacific  Improvement  Company 198,021  65 

Taxes  paid  during  the  year  : 


General 404,722  89—  448,205  69 

General  administration  expenses 330, 646  72 

Legal  expenses 216,750  41 

Civil  engineering 15,479  65 

Land  department  expenses — less  receipts  from  lands 

rented,  $13,336.26  23,700  78 

Interest  on  first-mortgage  bonds  of  the  aided  portion 

of  the  road,  paid 1,673,940  00 

Interest  on  first-mortgage  bonds  of  the  non-aided 

portion  of  the  road,  paid 1, 571, 451  67 

United  States  requirement  for  sinking  fund 792, 920  24 

Company’s  sinking-fund  requirement 1,034,760  00 

Land  bonds  redeemed  with  proceeds  of  land  sales...  711, 000  00 

Dividends  Nos.  13  and  14  on  capital  stock 3, 556, 530  00 


$16,067,183  67 


10,573,206  84 


Total..., 26,640,390  51 

Surplus  on  operations  for  the  year 35,  111  90 


Exhibit  No.  4. 


CENTRAL  PACIFIC  RAILROAD  COMPANY. 

Statement  showing  therevenue  and  expenditure  on  the  subsidized  portion  of  the  Central 
Pacific  Railroad  Company , 860.66  miles,  for  the  year  ending  December  31,  1882,  as 
ascertained  by  the  book-keepers  of  this  bureau  from  the  books  and  accounts  of  the 
company  in  San  Francisco. 


Earnings : 

United  States  : 

Passenger $35,988  01 

Freight 59, 929  16 

Mail 307,837  09 


Commercial : 

Passenger.. 2,537,811  26 

Freight 6,007,461  22 

Express 119, 809  36 


Car  service 

Rent  of  buildings. 
Miscellaneous 


$403, 754  26 


8,665,081  84 
7, 165  23 
18,067  00 
486,547  61 


Total  earnings 9,580,615  94 

Expenses : 

Conducting  transportation .• $728,722  49 

Maintenance  of  way 1, 170, 138  80 

Motive  power 1,605,367  09 

Maintenance  of  car 313,715  98 

General  expenses  and  taxes 917, 050  63 


Total  operating  expenses 


4,734,994  99 


♦Earnings  and  expenses  of  the  “ entire  line,”  whichmeans  the  Central  Pacific 

Sroper  and  all  the  leased  lines  (Southern  of  California,  Southern  of  Arizona,  and 
outhern  Pacific  Railroad  of  New  Mexico) ; total  mileage  being  3,200. 


38 


Interest  paid  on  first-mortgage  bonds  having  priority 
of  lien  over  the  United  States  bonds $1, 673, 940  00 


Total $6,408,934  99 


Net  earnings,  so  ascertained 3, 171, 680  95 

Twenty-five  per  cent 792, 920  24 

Net  earnings * 3,171,680  95 

Twenty-five  per  cent,  of  net  earnings 792, 920  20 


Surplus 2,378,760  75 

Deduct  a dividend  on  stock 2, 548, 820  45 


Deficit  of. 


170,059  70 


Exhibit  No.  5. 


Earnings  and  expenses , year  ending  December  31, 1882. 


[100  miles  subsidy  portion.] 

Earnings : 

Passengers 

Freight 

Mail 

Express 

Miscellaneous 


$106, 344  15 
386,779  22 
12,538  58 
4,955  64 
17, 447  24 


Total 


528,044  83 


Transportation 78,789  55 

Maintenance  of  way 86, 198  80 

Motive  power 93, 610  53 

Maintenance  of  cars 24, 473  97 

General  and  taxes 8,778  21 


291, 851  06 

204,962  76 


Total 

Deduct  interest  on  first-mortgage  bonds 96, 000  00 

Twenty-five  per  cent,  of  net  earnings 48,962  76 

Dividend  on  capital  stock 60, 000  00 


86, 888  30 

WM,  H.  ARMSTRONG,  Commissioner. 

Department  of  the  Interior, 

Office  Commissioner  of  Railroads, 

Washington,  D.  C.,  April  9,  1884. 


O 


